5 Issues markets focused on in Trump’s speech

President Donald Trump’s address to Congress did little to move markets, largely because it contained few new details on his economic or trade plans, which have been key drivers of global currencies, bonds and stocks in recent weeks. “It was, predictably, long on rhetoric, short on substance,” said Ray Attrill, the global head of currency strategy at National Australia Bank, based in Sydney. Here are five areas markets were focused on, and what was left unsaid.

BY Saumya Vaishampayan, Mar 1, 2017

1. Infrastructure spending

“The time has come for a new program of national rebuilding,” Mr. Trump said, according to prepared remarks, repeating his pledge of $1 trillion in infrastructure investment. Hopes for such a hefty stimulus have helped propel U.S. stock markets this year, but the address didn’t offer much new—and the president’s input is more important on this than on taxes or health care, our colleagues write in the live blog: “Mr. Trump will probably have to take the lead on infrastructure if anything is going to move through Congress.”

2. Taxes

Expectations for a tax overhaul, including a lower corporate rate, have been another spur to stocks. Mr. Trump said his economic team is working on “historic tax reform” that will cut the rate on companies, but again offered few details on either what or when. House Republicans’ “border adjustment” plan has encountered resistance in recent weeks.

3. Trade

Mr. Trump returned to a favorite campaign theme, trading partners’ practices he calls unfair, but didn’t discuss any actions, such as raising tariffs or pressing forward with particular cases. He mentioned China only once, declaring the U.S. has lost 60,000 factories since that country joined the World Trade Organization and Mexico not at all. Ahead of his speech, The Wall Street Journal reported that the administration is developing a policy that would champion U.S. law as a tool to take on trading partners, and seek to diminish the influence of the WTO in the U.S. The lack of specifics on tariffs could hearten investors who have piled into emerging-market stocks this year, partly on expectations protectionist talk won’t become protectionist action.

4. Currencies

Mr. Trump didn’t discuss U.S. trading partners’ foreign-exchange policies, though his administration has accused China, Japan and Germany of keeping their currencies weak to gain a trade advantage, and Mr. Trump himself told Reuters last week that the Chinese are “grand champions” of currency manipulation. During the campaign Mr. Trump promised to designate China a currency manipulator “on day one,” but Treasury Secretary Steven Mnuchin has suggested in interviews that he will follow the existing process of reviewing trading partners’ currency practices in April.

5. Budget

The president told Congress that the budget he’s preparing, expected to be released mid-month, “calls for one of the largest increases in national defense spending in American history.” That was already known, though. The question is how that spending will be financed. Mr. Trump could propose deep cuts from the State Department and U.S. Agency for International Development, The Wall Street Journal reported, though both Republicans and Democrats have objected.