Clues on trade policy to top of mind for stock investors

Bloomberg

Clues on trade policy are likely to be top of mind for stocks investors watching President Donald Trump’s State of the Union speech on Tuesday.
Trade remarks may influence equity sectors from footwear to auto parts and pharma stocks may be volatile if the president zeros in on drug costs reforms, while financials and housing are likely to be overlooked.
Trade is likely to occupy “a substantial portion” of the speech, as legislative action from Congress during the next two years is unlikely, so Trump needs to prioritise “areas where he can enact change unilaterally,” Veda Partners director of economic policy research Henrietta Treyz says. She expects the US president to “leave the door open for further tariffs … but message that progress is being made.”

Trump is expected to reference a few areas “where both parties can agree” “but it is difficult to imagine the rhetoric turning into reality when Washington struggled to keep the lights on,” Compass Point’s Isaac Boltansky said. Boltansky expects the speech to focus on “economic growth, immigration, a few bipartisan mirages and the wall.” Still, this year’s speech may mean less for investors than it has in prior years, as the State of the Union has become “more pomp than policy,” he said.