The British manufacturing sector grew more strongly than expected at the end of 2016, as the economy continued to remain resilient following the Brexit vote. The Office for National Statistics (ONS) said that output from the sector grew by 2.1% in December, and was up 1.2% in the fourth quarter. However, the ONS warned that December's figure was boosted by output from the "volatile" pharmaceuticals sector.
Japanese Prime Minister Shinzo Abe said that he wanted to show the world that the US and Japan had an “unwavering alliance” as he arrived in Washington for a two-day summit with Donald Trump. Mr Abe said he wanted to build a strong relationship with the new president to help tackle challenges including weak global growth, intellectual property rights and cyber security.
China's President Xi Jinping also had a cordial telephone conversation with Trump, in which Trump agreed to honour the one-China policy. This refers to a diplomatic understanding by which Washington does not challenge China’s claim over Taiwan. Following the conversation, Xi said that “The two countries are totally capable of becoming good cooperative partners,” and he hopes to “strengthen mutually beneficial cooperation in trade and economy, investment as well as international affairs”.
US stocks continued to hit record highs as investors remained upbeat about a tax reform plan that President Donald Trump vowed to unveil in the coming weeks. Trump's promise of a "phenomenal" tax plan helped to reignite a post-election rally, which had stalled in recent weeks on concerns over his protectionist stand and the lack of clarity on policy reforms.