Market update: Equities on front foot while gold and silver hover near records
Susannah Streeter, chief investment strategist, Wealth Club: ‘’Equity markets are in a positive mood as investors eye an easing of political tensions in the United States and hopes stay high for a buoyant series of results from big tech this week. The FTSE 100 has opened on the front foot, and stocks on Wall Street look set for another positive start to trading.
Concerns about another US shutdown are still swirling, but president Trump appears to be rolling back on the more extreme immigration policies which have caused such division and led to threats to withhold a federal funding agreement this week. Democrats and some Republicans were calling for investigations into actions of enforcement agents and now a top official is expected to leave Minneapolis, the centre of the protests. Nevertheless, a partial shutdown still can’t be ruled out, but investors appear to be shrugging off the implications. The attitude seems to be ’been there, done that’ given the full shutdown in the Autumn did not badly rattle markets. It may though lead to less reliable labour market data, given that the Commerce department which collates figures looks set to be affected. This is likely to make it more difficult for the Federal Reserve when it comes to assessing the temperature of the economy, and future path of interest rates.
While gold’s rampant run up has taken a breather but it’s still trading near record levels. Silver stumbled in its rapid streak, but it’s on its way back up again heading back towards recent highs. As well as a reliable store of value, silver is also increasingly sought after for industrial use particularly in the green transition, and it appears to be structurally undersupplied, with mine production growth weak, partly due to rising costs in the industry. Safe haven demand for precious metals doesn’t look as though it’ll fall back significantly any time soon. The trend of swapping out dollars and US Treasuries for other more reliable shelters appears to be continuing amid erratic US economic policymaking.”