FTSE 100 struggles for direction as markets await Trump's address to Congress

Outsourcing group Capita, one of the hardest hit in the post-Brexit sell-off, could find itself demoted from the FTSE 100 into the mid-cap index when positions of the FTSE 100 constituents are reviewed after close of play this tomorrow.

The company, which downgraded its profit forecasts twice in three months at the end of 2016, has been grappling with a slowdown in new orders coming through since the EU referendum, with shares down 48.1pc.

Chris Beauchamp, of IG, said: “The market has definitely fallen out of love with Capita”.

Not just Capita, as low-cost carrier easyJet and retailer Dixons Carphone are also facing the boot from the blue chip index, having surrendered 34.7pc and 27.4pc, respectively, in value since the Brexit vote, an indicative list from the FTSE Russell showed today.  

EasyJet has been hit by the pound weakness as price-war rages among Europe’s short-haul travel market.

Despite robust consumer spending since the Brexit vote, Dixons Carphone has come under pressure amid predictions spending could be dented this year as inflation erodes earnings growth. Mr Beauchamp also flagged that Amazon is “looming large”, the price of some technology gadgets have already increased due to currency fluctuations.

Meanwhile, the quarterly shake-up could also see Rentokil Initial and DS Smiths enter the FTSE 100.

A final decision and approval of changes will be announced after markets close tomorrow, using the market capitalisation of companies at today’s close. All changes will be made effective after market close on Friday March 17.

On the wider market, the FTSE 100 made modest gains, up 10.44p, or 0.14pc, to 7,263.44 amid a raft of earnings updates.

Babcock International rallied 63p to 948p after it said it remains on track to achieve its full-year targets, thanks to a strong order intake, while engineer GKN also jumped 16.9p to 359.9p on better-than-expected results. Full-year pre-tax profits increased by 12pc to £678m. It also enjoyed a bounce from Donald Trump’s promise to seek an “historic increase” of $54bn in the US defence budget.

Trump’s comments also propelled BAE Systems 12p higher to 630p and defence equipment maker Meggitt leapt 54.4p to 470.5p. The mid-cap stock also reported a 13pc rise in annual pre-tax profits.

Elsewhere, Burberry spiked 61p to £17.26 after activist investor Albert Frère’s GBL disclosed a 3pc stake in the company.

Meanwhile, Jefferies named Marks & Spencer as its most preferred stock to own among the UK retailers, upgrading it to “buy” from “underperform”. Shares bounced 5.8p higher to 334.8p.

Pearson was also among the risers, up 14.5p to 674p, on the back of a bullish broker note. Despite announcing plans to sell assets after reporting an annual loss of £2.6bn last week, Morgan Stanley raised its price target from 615p to 630p. The US investment bank notes there were items of “relative good news” in its full-year results including better-than-expected debt figures.

On the other side, metals prices came under pressure as investors took profit ahead of Trump’s address to Congress prompting mining stocks to fall. BHP Billiton lost 28p to £12.98, Rio Tinto slipped 43.5p to £32.97, Glencore dropped 3.7p to 322.1p and Anglo American shed 2p to £12.71.

Finally, shares in Aim-listed Strategic Minerals jumped 11.1pc after it reported a high cobalt content at its Hanns Camp project in Western Australia.

With that, it's time to close for today. I'll be back again tomorrow from 8.30am. 

It was a relatively quiet afternoon on trading floors as investors sat on the sidelines ahead of Trump's Congressional speech. 

By close of play: 

• FTSE 100: +0.14pc
• DAX: +0.4pc
• CAC 40: +0.28pc
• IBEX: +0.96pc

 Joshua Mahony, of IG, said: "European and US markets have spent much of the day contemplating what the implications of Donald Trump’s speech will be tomorrow morning, with the FTSE trading largely flat through the day. Trump’s appearance on Fox News today served more as a self-promotion performance than being anything too illuminating, with Monday’s comments instead providing us with the knowledge that we should fix our gaze on a major infrastructure announcement rather than a tax one.

"Yesterday’s appearance by Trump has certainly been the main driver on the FTSE today, with the announcement of a 10pc increase in military spending benefitting the likes of Rolls-Royce, Babcock and BAE systems." 

Shares in Burberry spiked this afternoon after the holding company of  Belgium's richest man, Albert Frere, disclosed a 3pc stake in the luxury fashion house. 

GBL Energy Sarl reported a stake of 13.18m. 

Frere has a reputation for helping to shake up the companies in which he invests. 

After he took a stake in Adidas in 2015, the German company appointed a new chief executive and announced plans to sell its golf business. Shares in Adidas, in which GBL still has a 5pc stake and a representative on the supervisory board, have more than doubled since Frere invested.

 Shares leapt 4.4pc to £17.36 in afternoon trade, its highest level since May 2015, and volumes spiked following the announcement. 

More data from the US this afternoon. The Chicago Purchasing Management Index hit its highest level since December 2014 this month. 

February's reading came in at 57.4, beating consensus forecasts of 53.0 and January's figure of 50.3.

The US consumer confidence index hit its highest level since July 2001, data from the Conference Board showed this afternoon. 

The index rose to 114.8 this month, beating consensus forecasts of a reading of 111.0. It was also above a revised January reading of 111.6.

Nissan could expand its supply chain in the UK as a result of Brexit - but has also warned it could “adjust” its UK operations as the conditions of Britain leaving the EU become clearer.

The Japanese car maker said it would build two models - the new Qashqai and X-Trail - at its Sunderland plant after getting assurances from the government last year that its competitiveness would not be damaged by Britain pulling out of the EU.

However, Colin Lawther, Nissan’s senior vice-president in Europe, indicated to MPs on the International Trade Select Committee that the car maker could row back on its commitments.

Read the full story by Alan Tovey here

Sir Philip Green has agreed to contribute £363m into the BHS pension fund, in a bid to settle a long-running row over who is responsible for the collapsed retailer's retirement scheme.

The Topshop owner said in a statement: "I have today made a voluntary contribution of up to £363m to enable the trustees of the BHS Pension schemes to achieve a significantly better outcome than the schemes entering the Pension Protection Fund, which was the goal from the outset.

He added: "Once again I would like to apologise to the BHS pensioners for this last year of uncertainty, which was clearly never the intention when the business was sold in March 2015.

"I am also happy to confirm that any of the pensioners that have faced cuts over the last year will now be brought back to their original BHS starting level pension and will all be made whole."

Read the full story here

US stocks opened slightly lower this afternoon as investors remained on the sidelines ahead of Trump's address to Congress. 

At the opening bell: 

• Dow Jones: -0.04pc
• S&P 500: -0.17pc
• Nasdaq: -0.12pc

- U.S. economic growth slowed in the fourth quarter as previously reported, with robust consumer spending offset by downward revisions to business and government investment.

Gross domestic product increased at a 1.9pc annual rate, the Commerce Department said on Tuesday in its second estimate for the fourth quarter, confirming the estimate published last month. Output increased at a 3.5pc rate in the third quarter.

The economy grew 1.6pc for all of 2016, its worst performance since 2011, after expanding 2.6pc in 2015.

Economic data early in the first quarter has been mixed, with retail sales rising in January but homebuilding and business spending on capital goods easing.

The economy may get a boost from President Donald Trump's proposed stimulus package of sweeping tax cuts and infrastructure spending as well as less regulation.

Trump, who pledged during last year's election campaign to deliver 4 percent annual GDP growth, has promised a "phenomenal" tax plan that the White House said would include tax cuts for businesses and individuals.

Details on the proposal remain vague, though Treasury Secretary Steven Mnuchin said on Sunday that Trump would use a policy speech to Congress on Tuesday night to preview some aspects of the tax reform plans.

Economists polled by Reuters had expected fourth-quarter GDP would be revised up to a 2.1 pc rate.

Consumer spending, which accounts for more than two-thirds of US economic activity, was revised sharply higher to a 3pc rate of growth in the fourth quarter. It was previously reported to have risen at a 2.5pc rate.

Some of the increase in demand was met with imports, which increased at a 8.5 percent rate rather than the 8.3pc pace reported last month. Exports declined, leaving a trade deficit that subtracted 1.70 percentage point from GDP growth as previously reported.

There was a small downward revision to inventory investment. Businesses accumulated inventories at a rate of $46.2bn in the last quarter, instead of the previously reported $48.7 billion. Inventory investment added 0.94 percentage points to GDP growth, down from the 1.0 percentage point estimated last month.

Business investment was revised lower to reflect a more modest pace of spending on equipment, which increased at a 1.9pc rate instead of the previously estimated 3.1pc pace. That was still the first increase in over a year and reflected a surge in gas and oil well drilling in line with rising crude oil prices.

Report from Reuters

Outsourcing group Capita and low cost carrier easyJet are facing relegation from the FTSE 100. 

Just last week, Capita, under pressure from a slowdown in demand from customers, said it had written off the value of a number of historic contracts, sending its shares down over 4pc. It downgraded profit forecasts twice in three months at the end of 2016 and last week it said assets amounting to around £50m. 

Meanwhile, easyJet's shares have plunged by almost 40pc since the Brexit vote. Just last month it said the weaker pound would hit profit more than expected this year. 

Using the market capitalisation of companies at the close of trading on Monday 27, here's a list of the possible changes:   

FTSE 100 Index

FTSE 250 constituents that are eligible for potential entry into the FTSE 100 Index are as follows:

1. Scottish Mortgage Inv Tst
2. Rentokil Initial
3. Smiths (DS)

FTSE 100 constituents facing potential demotion into the FTSE 250: 

1. Capita
2. Easyjet
3. Dixons Carphone

FTSE 250 Index

FTSE Small Cap companies or new entrants that are eligible for potential entry into the FTSE 250: 

1. Syncona
2. Sanne Group
3. TBC Bank Group

FTSE 250 constituents that are eligible for potential demotion into the FTSE Small Cap Index:

1. Marshalls
2. International Personal Finance
3. CMC Markets

A final decision and approval of changes will be announced after markets close on Wednesday March 1, using the market capitalisation of companies at close of trade tonight. 

Changes will be made effective after market close on Friday 17 March, i.e. from start of trading on Monday 20 March.

Gold prices held steady in afternoon trade after sliding from a three-and-a-half-month high yesterday as investors awaited Trump's address to Congress. 

The US President is expected to provide more clarity on economic reforms. This afternoon the precious metal was subdued at $1,253.61 an ounce having hit its highest level since November 11 of $1,263.80 yesterday. 

David Govett, Head of precious Metals for Marex Spectron, said: “Gold continues to stay supported with the Trump factor, the Europe factor and the weakness in 10y yields keeping it there. What is interesting to note is that for once, gold is making a very measured move on the upside. Usually it runs up, comes off, runs back up again and jumps around like a scalded cat on its way higher. This time however, the move up is quite serene, by gold standards anyway!

"All that is needed is for President Trump to announce sweeping infrastructure changes, tax cuts and all sorts of things that he initially promised and the dollar will rally, yields will rise and gold will fall. Such is the way of the world. Today is the perfect opportunity for Trump to do just this as he is set to give a speech to a joint session of Congress at 9pm Eastern time this evening. Unfortunately ahead of this I would expect the markets to be very dull as we await his pearls of wisdom, or not as the case may be!" 

The Dow Jones closed at a record high for a 12th straight session yesterday. It closed at record highs for 13 sessions in a row back in 1987 (that was nine months before the Black Monday market crash).

So if the Dow closes at a record high tonight, it will match the 1987 record. 

US stocks are poised to dip when the opening bell sounds on Wall Street as investors await Trump's address to Congress for details on his agenda for the economy. 

Speaking to Fox News earlier today, he said he believes the extra $54bn he has proposed spending on the US military will be offset by a stronger economy as well as cuts in other areas.

The US President said: "I think the money is going to come from a revved up economy." 

Here's a look at the opening calls courtesy of IG: 

Laird has launched a £185m rights issue as the newly installed boss of the electronics business battles to get its debt under control.

The four-for-five rights issue, which is priced at a 51.4pc discount, was confirmed alongside annual results that showed the company's losses have ballooned even though revenue rose 27pc to £801.6m.

On a pre-tax level Laird was £110.8m in the red compared with £7.6m last time round after it took a £155.5m impairment on its wireless division, with the hit coming on the value of acquisitions made decades ago.

Read the full story here by Alan Tovey

Ahead of Trump's Congressional address later, European bourses are struggling for direction this afternoon despite a raft of upbeat earnings in the region. 

Here's a snapshot of the current state of play: 

 Mike van Dulken, of Accendo Markets, said: "Equities are hugging breakeven, investors wary of taking on any additional risk before Trump's congressional address in the wee hours of tonight. This is seen as the platform from which he will elaborate on increased military and infrastructure spending as part of his 'phenomenal' stimulus pledge to boost US growth. Fresh USD weakness in spite of hawkish Fed commentary weighs on the UK's FTSE and German DAX via GBP buoyancy and EUR strength." 

According to ING, there are four areas of Trump's Congress speech that investors will be focusing on: 

1. Tax policy and reform plans;
2. Infrastructure spending;
3. Squaring the budget deficit;
4. Trade and protectionism.

Here's a great graphic from ING, which flags what investors should watch out during Trump's speech tonight: 

The pound traded near a two-week low against the US dollar as investors awaited Donald Trump's Congressional address. 

Meanwhile, fresh worries about Brexit also kept the local currency under pressure. On Monday, reports surfaced that Scottish nationalists were preparing to demand a second independence referendum. However, a British government spokesman said there should not be another vote. 

Today, the pound is trading off by 0.26pc at $1.2428 in choppy trade. 

Here's our full report on Charlotte Hogg's appearance before the Treasury Select Committee this morning by Tim Wallace: 

Top Bank of England official Charlotte Hogg has come under pressure from MPs due to her family links to Barclays - a bank she will soon start regulating in her new job as deputy governor for markets and banking.

She may have to sit out of discussions relating to Barclays, despite her hugely important role in monitoring a bank whose stability has major implications for the wider UK economy.

Ms Hogg, who has served as the Bank of England’s chief operating officer since 2013, is replacing outgoing deputy Minouche Shafik in the role. She will sit on the Monetary Policy Committee, Financial Policy Committee and Prudential Regulation Committee. She starts the new job on March 1.

But her brother works for Barclays in a job planning the bank’s long-term strategy, which her decisions could influence.

“My brother is part of Barclays’ strategic planning group, he has been for some number of years,” she told the Treasury Select Committee.

“I don’t discuss work with him and he doesn't discuss it with me. We mostly talk about his children.”

Ms Hogg has declared this potential conflict of interest to the Bank of England and promised not to discuss work with her brother, noting that she did not even know his job until she asked him specifically for the purpose of declaring it to the Bank.

Read the full story here

Here's our full report on Meggitt's full-year results by industry editor Alan Tovey: 

Along-awaited turnaround appears to have finally taken hold at Meggitt, the technology group that has been the subject of break-up speculation.

The aerospace, defence and energy business reported a surge in annual revenue and profits as a whole series of factors aligned to lift the FTSE 250 group.

Sterling’s plunge was among the biggest drivers of the recovery, followed by rising sales from acquisitions.

Revenue for the year to December soared 21pc to £1.99bn, while underlying pre-tax profit rose 13pc to £352m. On a statutory basis, profit fell 7pc as a result of a write down on currency investments.

Stephen Young said an efficiency drive launched several years ago designed to boost productivity was now spreading through the business. Once this system is in place across Meggitt, he forecast margins would grow by between 2pc and 2.5pc a year from 2018, boosting it from the current level of 19.1pc

Read the full story here

Donald Trump said  he believes the extra $54bn he has proposed spending on the US military will be offset by a stronger economy as well as cuts in other areas.

In an interview with Fox news broadcast this morning, he said: 

"I think the money is going to come from a revved up economy.

"I mean you look at the kind of numbers we're doing, we were probably GDP of a little more than 1 percent and if I can get that up to 3 or maybe more, we have a whole different ball game. It's a whole different ball game."

His interview with Fox comes ahead of his address to Congress, which will take place at 2am GMT. 

Here are some of the clips from the interview for those who missed it: 

Shares in house builder Taylor Wimpey have edged up 0.6pc to 179.6p after its full-year pre-tax profits surged 22pc to £733.4m. Sam Dean has the details: 

A strong UK housing market helped Taylor Wimpey post a bumper set of results in 2016, as fears that Brexit may dampen demand for homes continued to recede. 

The FTSE 100 company was boosted by the strength and stability of the housing market following the vote to leave the European Union in June, as revenues climbed 17pc from £3.1bn in 2015 to £3.7bn last year.

Pre-tax profits rose by more than 20pc to £732.9m. 

Taylor Wimpey said “the UK housing market fundamentals remain good with strong customer confidence in core geographies”.

Including Spain, Taylor Wimpey built a total of 14,112 homes last year, up 4.8pc from 2015.

Read the full story here

Back to Charlotte Hogg's appearance before the Treasury Select Committee, where she has told MPs that she would have concerns if the impact of sterling depreciation on inflation doesn't diminish over the next two years. 

She also told MPs that she backed the recent FPC decisions on the counter-cyclical capital buffer for banks. 

"It would be very hard to set a negative counter cyclical capital buffer for banks," she added. 

Hogg also thinks the current bank capital regime is an issue for small challenger banks. 

 The new Bank deputy governor hopes to be able to resolve major banks that suffer financial difficulties by 2022. 

Shares in Go-Ahead have slumped 13.9pc and are poised for their biggest one-day drop since mid-June in volume terms after it cut its full-year expectations due to challenges in its GTR rail franchise. Bradley Gerrard reports: 

Go-Ahead Group has warned it could take £15m hit to its full-year profits because of the ongoing woes on strike-hit Southern Rail.

The rail and bus group, reporting its results for the six months to December 31, said its rail division had been knocked by industrial action linked to changes it says it is contractually obliged to make as part of the Govia Thameslink franchise.

Go-Ahead co-owns the Govia rail franchise - which also includes London Midland and Southeastern - with France’s Keolis on a 65pc-35pc split respectively. The company's shares dropped 14pc this morning to £19.96.

Rail revenues rose 2.2pc to £1.26bn in the first half of the year but operating profit in this division dropped 35pc to £26.9m. This was the only division to see a drop in profits but was enough to drag group-wide pre-tax profit down 11.7pc to £67m.

Read the full story here

With UK and European markets trading modestly lower this morning, Chris Beauchamp, of IG, said investors are opting to sit on their hands ahead of Trump’s speech to Congress.

"For a market that has rallied hard over the past three months, the speech is a potential ‘make or break’ moment; a lack of details on infrastructure spending could torpedo sentiment. Last Friday’s sudden drop in equity markets offers a foretaste of what might happen if the market falls out of love with the Donald.

"A higher US dollar, talked up by Fed officials last night, is proving once again to be a major difficulty for miners, as commodity prices fall back. Fresnillo’s profit resurgence last year was not enough to keep the shares from falling 2pc, with a  clear sense that much of the easy work in cost-cutting and slim-lining has already been done." 

Shares in precious metal miner Fresnillo have dipped 1.1pc despite reporting a more than six-fold jump in its profits for this year. Jon Yeomans reports: 

Donald Trump’s election in the US has lent a helping hand to gold and silver miner Fresnillo, which benefited from falling costs due to the plunging Mexican peso.

The currency tumbled 17pc against the US dollar on average in 2016, on the back of Mr Trump’s hostile rhetoric towards Mexico. The fall meant that Fresnillo, which reports its accounts in dollars, found its six mines in Mexico were cheaper to operate.

The FTSE 100-listed miner also gained from a tighter rein on costs and higher precious metal prices, driving a 90pc jump in cashflow to $1bn (£80m) and a 238pc surge in full-year pre-tax profits to  $718m. Revenues climbed 35pc to $1.9bn.

Octavio Alvídrez, chief executive, said Fresnillo’s strong performance was “48pc due to stronger productivity and 52pc due to external factors” such as the peso devaluation.

He said that Fresnillo would “focus on what we can control” and keep its costs as low as possible to deal with swings in prices.

“We remain committed to balancing growth with returns,” Mr Alvídrez added.

Read the full story here

Away from Hogg's appearance in front of the TSC, official data showed this morning that Italian inflation jumped 1.5pc this month, its highest level in almost four years.

Hogg tells the Treasury Select Committee that it possible that she could recuse herself from discussions over Barclays in the Bank's PRC  due to her brother's role. 

The Bank's deputy governor also told MPs this morning that the distributional effects of QE have not been sufficiently strong to skew overall distribution of wealth and income in the UK. 

"When the time comes to unwind QE, even if that is likely some way off, we will do so in a way that is mindful of the need to maintain orderly markets," she added. 

The MPC will need to be clear about its intentions when unwinding QE in order to avoid an unintended move in gilt yields, she said. 

Hogg does not think QE has created a problem of overvaluation in the gilt market, adding that she does not see evidence of a bubble in gilt prices. 

Bank of England Deputy Governor Charlotte Hogg told the Treasury Select Committee that group think is "not alive and well" at the Bank of England. 

Facing a grilling from MPs, Hogg said her tolerance for temporary above-target inflation will depend on events. 

"I would have no tolerance for a less than credible path back to target - from eithe r above or below the target," she added. 

There may be upside risks to business investment as the new trading arrangements with the EU become clearer, she told MPs. 

Hogg also said household and market-based measures of near-term inflation expectations are more elevated than usual. 

She also said that the operational resilience of the banking system, including cyber threats, is a risk to financial stability. 

Bank of England Deputy Governor Charlotte Hogg, who will join the central bank's top policy committees next month, said this morning she would be able to stand up to BoE Governor Mark Carney if required.

Hogg, who is currently the Bank's chief operating officer, also said she did not think there was a culture of group-think at the Bank.

Asked by a committee of lawmakers if she thought she would be able to stand up publicly to Carney, Hogg said: "I do."

She said she had already had disagreements with Carney in her current role over staffing and organisational issues.

Hogg replaces Minouche Shafik as deputy governor for markets and banking. She will serve on the Bank's monetary, financial and prudential regulation policy committees.

The highlights so far: 

Shares in defence equipment maker Meggitt surged 10pc this morning to the top of the mid-cap index after Donald Trump said yesterday that his administration is seeking a "historic" increase in defence spending. 

The stock price was also supported by strong full-year results. The FTSE 25- firm reported full-year pre-tax profits of £352.1m, compared with £310.3m a year ago. It also increased its final dividend by 5pc to 10.3p per share. 

Meggitt enjoyed revenue growth of 21pc last year benefitting from favourable FX moves and composites acquisitions completed late in 2015. 

The group said the outlook for defence expenditure in the US looks "more positive than it has done in recent years". 

"Military budgets have increased in many regions for the first time in several years, and there remains significant opportunity for retrofit and reset activity - a key campaign pledge from President Trump and work which Meggitt is well equipped to win.  We expect that it will take time for these increased budgets to impact our revenues, particularly with an ongoing Continuing Resolution and a new administration in the US.  However, organic order growth of 6pc and a book to bill  ratio of 1.06 in 2016, suggests revenue growth will increase steadily in 2017 and beyond."

Shares in baker Greggs dipped 2.8pc this morning despite beating forecasts with a 10pc rise in full-year profit. 

The FTSE 250 firm made a pre-tax profit of £80.3m for the year to December 31, up from £73m in 2015 and ahead of forecasts of £78.7m. 

Sales rose 7pc to £894.2m. 

It also said it improved its product range, extending its choice in hot drinks, food and healthy options. 

However, chief executive Roger Whiteside reiterated its cautious outlook: "The UK consumer outlook is more challenging than we have seen in recent years, with industry-wide pressures emerging in commodities as well as labour costs. However we are confident of making further progress as we implement our plan to grow Greggs as a contemporary food-on-the-go brand."

Despite the profit beat, Peel Hunt cut its rating to "hold" from "buy" and cut its price target to £10 from £11. 

Anthony Cheung, of Amplify Trading, flags that although Trump's Congress appearance isn't until 2am GMT, he'll be appearing on FOX at 11am. 

Jeremy Cook, of World First,said focus and detail is needed from Trump during his Congressional address tonight. 

He added: "The dollar rallied yesterday as Trump promised that he was going to “spend on infrastructure big” although his tax plan could not be fully announced and costed until his repeal and replace of Obamacare is underway.

"This would fit with Treasury Secretary Mnuchin’s estimation of something to happen by Congress’s August recess. Indeed, given that specific details about President Trump’s tax and spending proposals might be somewhat limited and we may therefore have to await the mid-March release of the White House budget which is for the moment scheduled on 13th March, we would be prepared to walk in tomorrow to see dollar on the back foot."

That didn't take long. With investors anxious ahead of Trump's Congressional appearance the FTSE 100 has dipped into the red. 

It is currently down 0.06pc at 7,248.15.

 Meanwhile, Europe's Stoxx 600 has also turned negative, down 0.1pc on the day. 

Here's what the experts had to say ahead of Trump's first major Congressional address: 

Ipek Ozkardeskaya, of London Capital Group, said markets, especially the US stock markets, are holding their breath as Trump prepares to unveil his much-expected fiscal plan.

She added: "According to White House aides, US President Trump would propose $54bn increase in defense spending, which would be 10pc rise on the current defense budget. Such historical rise in the military budget would certainly imply sharp cuts in several federal agencies’ budgets to balance the sheet."

But Ms Ozkardeskaya said today’s major question is could it be a buy-the-rumour sell-the-fact? Or could Trump surprise the markets beyond the actual outrageous pricing?

"Hedging positions and stops could amplify a potential sell-off in the US stock markets in case of disappointment in the US session."

Meanwhile, Kathleen Brooks, of City Index, reckons tonight's Congressional address by Trump at 2am is "worth staying up for". 

"With volatility ticking higher, but remaining at low levels, Treasury yields ticking higher and US stocks continuing to touch record levels, whether or not current trends persist is likely to depend on Trump’s performance this evening.

"We expect the markets to hang on Trump’s every word, at least initially. If he does mention numbers, particularly the scale of the corporation tax cut that he wants and the size of the infrastructure programme then there could be further gains for stocks, and we may see fresh record highs on Wednesday. If he is fairly vague on the size and scale of his fiscal plans then we would expect a decline in US markets this week, however, the extent of the sell-off could depend on a few other factors." 

Elsewhere, Holger Zschäpitz of Welt pointed out that stocks have gained $6 trillion since Trump's election: 

Finally, FXTM chief market strategist Hussein Sayed highlighted that currency markets are moving in a relative tight range in early trading, as traders prefer to sit on the sidelines and refrain from taking any big bets ahead of the US. President’s Congressional address later today in what seems to be the key market driver for the week.

"Expectations are very high on delivering some concrete plans this time and if President Trump fails to do so, many investors will be ready to push the sell button." 

French consumer prices rose 0.1pc this month, giving an annual inflation rate of 1.4pc, according to a preliminary estimate from the INSEE statistics office released this morning using EU harmonised data.

The figure is lower than forecasts which pointed to a reading of 1.7pc. It also marked a pull-back from a more than four-year high of 1.6pc reached in January.

In a separate report, INSEE said producer prices rose 0.7pc in January, giving a 12-month rate of 3.8pc.

 Meanwhile, separate data form the INSEE confirmed that the French economy grew 0.4pc in the final quarter of 2016. The fourth quarter data meant that for the full year 2016 the French economy grew 1.1pc.

European bourses inched higher this morning buoyed by encouraging corporate earnings. However, earnings were limited as investors awaited Trump's first major Congressional address. 

Here's a snapshot of the current state of play in Europe: 

 Mike van Dulken, of Accendo Markets, said: "Calls for a positive open come after another record close on Wall St (best run in 30yrs) and in spite of another mixed Asian session overnight. Investors cautiously optimistic about Trump’s Congressional address, desperately wanting more clarity about the policy ideas fuelling this rally.

"Those looking for more on US Tax changes, however, may be left wanting after Trump told the press  yesterday that this depends on the cost of Obamacare’s repeal, meaning more time required. Expect much more about increased military spending at the expense of agency budgets, although anything on infrastructure spending could be enough to make up for silence on tax to sooth any bullish nerves." 

 Hong Kong stocks fell for the fourth session in a row on Tuesday as a months-long rally showed further signs of fatigue, and as investors awaited a speech by US President Donald Trump for details on tax reform and infrastructure spending.

The Hang Seng index fell 0.8pc to 23,740.73 points, while the China Enterprises Index  lost 0.3pc to 10,297.96.

The Hang Seng has gained around 8pc so far this year, while the HSCE has climbed nearly 10pc.

Much of the market's attention was on Trump, who said he would talk about plans for "big" infrastructure spending in his first major policy address to Congress on Tuesday (9 pm ET/0200 GMT on March 1).

Most sectors fell on Tuesday, with telecom .HSCIT and energy .HSCIE shares among the biggest losers.

 Report from Reuters

Good morning and welcome to our live markets coverage. 

Last night, US stocks ended higher with the Dow Jones closing at a record high for a 12th consecutive session, as US President Donald Trump said he would talk about his plans for "big" infrastructure spending in his first major policy address to Congress today. 

The Dow's streak of record-high closes matches a 12-day run in 1987.

Today, focus remains on Trump as markets await his Congressional address and the second estimate of US Q4 GDP figures. 

Michael Hewson, of CMC Markets, said: "While markets no doubt appear to like what they are hearing, the President now needs to deliver, he’s talked the talk and he now needs to walk the walk.

"If he fails to do so we could well see a swift market reaction and while the general consensus would appear to be that a Republican President is likely to have a better chance of getting his away at a time when Republicans control both major legislatures there is still the problem of the debt ceiling which needs to be raised by March 15^th, the same day coincidentally as the culmination of the next Fed rate meeting." 

Elsewhere, Charlotte Hogg will appear before the Treasury Committee to discuss her appointment as the Bank of England's Deputy Governor. The annual British Chamber of Commerce conference takes place in London today, where former chancellor George Osborne is set to make an appearance. 

Also on the agenda: 

Full-year results: Derwent London, GKN, Direct Line Insurance, Moneysupermarket.com, Interserve, Jardine Lloyd Thompson, Laird, Fresnillo, Elementis, Meggitt, Novae Group, Johnson Service Group, IWG, Provident Financial, Sphere Medical, St James’s Place, Taylor Wimpey, Dalata Hotel Group, Bodycote, Croda International, Greggs, Virgin Money

Interim results: Ricardo, Waterman Group, Go-Ahead Group, Swallowfield, Redde

Trading update: Babcock International

AGM: Sage Group

Economics: GfK Consumer Confidence (UK), Nationwide HPI m/m (UK), preliminary GDP price index q/q (US), goods trade balance (US), preliminary wholesale inventories m/m (US), Chicago PMI (US), CB consumer confidence (US), Richmond Manufacturing index (US), retail sales m/m (GER), CPI flash estimate y/y (EU)