The Dow Jones Industrial Average traded above 20,000 for the first time on Wednesday, resuming a rally that began in the wake of US President Donald Trump’s surprise election victory.

The rally was reignited by Trump’s signing of numerous executive orders since his inauguration on Friday.

The index came within a point of the historic level on Jan. 6, as investors banked on pro-growth policies and tax cuts from the new administration.

“A seminal moment. It is just a number but it is a big number, it is certainly a flashy number,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. “There is a real belief that Trump is real, he has been extremely active these first couple of days of the presidency and a change may happen faster than people had thought.”

If the index remains above 20,000 by closing time, the 42-session surge from the first close above 19,000 would mark the second-shortest length of time between such milestones.

World stocks too where at a 19-month high on Wednesday, lifted by strong Japanese trade data, stellar European company earnings and Trump expectations.

Europe’s index of 300 leading shares rose 1 per cent and Germany’s DAX rose 1.4 per cent to a fresh 18-month high, while the UK FTSE 100’s rise was limited to 0.3 per cent by the strong pound.

Spanish bank Santander was among the big gainers in Europe, its 4 per cent rise in 2016 net profit giving its share price a similar boost and leading the continentwide rally in bank stocks.

Japan’s Nikkei advanced 1.4 per cent, buoyed by data showing the country’s exports rose for the first time in 15 months in December, a positive sign for the economy even as talk of US protectionism looms over the outlook.

Trump signed two executive orders on Tuesday to move forward with construction of the Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favour of expanding energy infrastructure.

He also met chief executives of the Big Three US automakers to push for more cars to be built in the United States.

“We are clearly seeing a pro-business administration that is minded to action,” ETX Capital’s Wilson said.

In currencies, the dollar failed to carry on its upward momentum from Tuesday.

Lingering concerns about growing protectionism and the potential negative effects on global trade and growth remained close to the surface. In this environment, the outlook for the Federal Reserve is murky.

“So far this year the tone of US economic data has been adequate but not sufficiently strong to suggest that the Fed need to move away from the cautiously optimistic sentiments expressed by [chair Janet] Yellen last week,” Rabobank analysts wrote in a note.

“Since so little is currently known about the detail of Trump’s policy we would expect the (Fed) to be reluctant to act at least until the outlook becomes clearer,” they added.

The dollar fell 0.5 per cent to 113.15 yen, and 0.4 per cent against a basket of currencies. The euro was up at $1.0760, shrugging off a surprised fall in German business morale this month.

Sterling rose 0.6 per cent to $1.2595, the day after Britain’s Supreme Court ruled that the government would need approval from parliament before formally triggering the country’s departure from the European Union.

She also announced a White Paper on Brexit, a document sought by many in Parliament that will lay out the leaving policy.

The court decision overall was seen as clearing the way for Prime Minister Theresa May to get on with launching Brexit talks. Sterling has bounced 4 per cent over the last week.

Oil prices reversed their overnight gains. Brent futures dipped 0.8 per cent to $54.97 per barrel, after rising 0.4 per cent overnight

 

source : gulfnews