Today's markets: Enthusiasm is starting to wane

Enthusiasm for President Donald Trump’s first actions, or lack thereof, is waning this morning with shares in London, Paris and Frankfurt all flat or marginally in the red, after a good day yesterday. The Stoxx 600 had hit an intra-day high on Wednesday as traders revelled in the lack of European tariffs from the new president, and were buoyed by data showing a growing appetite for European shares from global fund managers, as per Bank of America’s popular survey. But as you’d expect on what is now effectively day three today, things are going a little stale. There’s not much else other than a couple of earnings updates to move markets, so it’s quiet. No significant movers in the FTSE 100 this morning either.

It’s a similar situation across the pond, where yesterday, tech shares in particular had a stellar day on the back of general enthusiasm, and the new AI infrastructure fund announced by Trump and supported (and somewhat funded) by many of the tech giants. The fund is an initial $100bn but could rise to $500bn, but it’s still unclear where the money is coming from. This has already disrupted Trump’s new government, with his happy-to-serve lieutenant, and absolutely in no way needing to be front and centre, Elon Musk, pouring cold water on the project. Musk tweeted that funding wasn’t going well, and was immediately lambasted by OpenAI chief Sam Altmannm whose company will operate the fund, with Altmann suggesting Musk look after the interest of the country, rather than his own companies. Given Trump announced the project, Musk seems to have gone a bit rogue. I will happily wager that won’t be the last time I write that phrase.

Tech shares led the way, with the S&P 500 rising 0.6 per cent and the tech-heavy Nasdaq up 1.3 per cent, with Microsoft (an investor in OpenAI) climbing 4 per cent, and Oracle rising 6.8 per cent. The Nasdaq was also helped by Netflix’s near-10p per cent jump as investors continued to revel in its latest earnings report. However, this morning, it’s all a bit quiet, with futures showing New York will open down slightly. This is the problem when traders take one-track views and push up shares, it becomes like a drug. You constantly need a hit of good news to keep going, otherwise you just crash. A lack of good news isn’t bad news, but markets seemed to have forgotten this. And this is why, when it comes to Trump’s new policies, there will be justifiable reasons to buy shares and justifiable reasons to worry about the macro situation, but the only cast iron guarantee is volatility.

One region that’s doing better today than yesterday is China after the regulator ordered insurance companies to buy more domestic shares, which sent markets up. Domestic indices, the Shanghai Composite and the CSI 300, jumped and ended the sessions well into the green, countering the concerns over Trump’s 10 per cent tariffs. Nice timing from the Chinese authorities.

Closer to home and it’s as gloomy as the weather with new consumer confidence surveys showing things are tanking. The British Retail Consortium said it found half of consumers expected the economic situation to worsen, and a similar survey from consumer champion Which? found 62 per cent were negative on the UK economy. Next month’s rate cut can’t come soon enough.

By Taha Lokhandwala