“However, we still view the fundamental foundation as supportive for recovery, including high employment, solid consumer spending, improved business investment trends and mild inflation that should result in a firm fundamental foundation for the stock market.”

As part of the optimism the day after Christmas, Amazon reported a “record-breaking” holiday season. Retailers’ and consumer products’ shares soared including Nike, Apple, Home Depot and Macy’s.

Mastercard said holiday sales increased 5.1 per cent to more than $US850 billion – the strongest growth in the last six years. Online shopping also saw large gains of 19.1 per cent compared to 2017.

In a series of tweets earlier in the day, Larry Summers said US economic data continues to be positive. “It is important to remember that one can see essentially no trace of even the 1987 crash in economic data. Markets are noisy, flawed predictors of the economy.”

However Mr Summers flagged several concerns, in particular President Donald Trump’s continuing criticism of the Federal Reserve and its chairman, Jerome Powell.

“Open warfare between @POTUS @realDonaldTrump and the @federalreserve seems almost calculated to add to risk premiums in the markets.”

Mr Summers also said it is important to note that “more than $US5 trillion in wealth has been lost in December because of stock market declines. This likely will take considerably more spending out of the economy than the @realDonaldTrump tax cuts put in”.

Earlier in the day, White House economic adviser Kevin Hassett told reporters that Mr Powell’s job was “100 per cent” safe. Mr Hassett also said that Treasury Secretary Steven Mnuchin retains the confidence of President Donald Trump.

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