Market update: President Obama pledges to “reignite” the US economy

Wall Street closed Tuesday’s trading session broadly higher ahead of President Obama’s State of the Union address, which revealed more detail on his policy agenda. He pledged to revive the economy, support the middle class, reform taxes and called on Congress to raise the federal minimum wage from US$7.25 an hour to US$9 to ease poverty and approve US$50bn in infrastructure projects. He remains committed to reducing the budget deficit, but cautioned that spending cuts and tax increases must be “balanced.” The S&P 500 closed up 0.2% while the Dow Jones gained 0.3%. In earnings news, Coca Cola disappointed with a 3% rise in global sales volumes, far below analyst forecasts of 5.4% owing to weaker sales in Europe and slower growth in North America and the Pacific.

This morning, the FTSE 100 is down by 0.4%; the focus today will be on the latest Bank of England’s quarterly inflation report to be released later in the morning. The FTSE Eurofirst 300 is also slightly lower, having fallen 0.1% in early trading. Shares of French bank Société Générale are weaker after the announcement of a fourth quarter loss of €476m, compared to profit of €100m in the corresponding quarter last year. Household products group Reckitt Benckiser is edging up after it reported strong performance in its health and hygiene divisions. In the bond markets, Italy is scheduled to auction around €6.75bn of bonds today; at the time of writing 10-year government bonds yields have fallen by eight basis points to 4.43%.