World Economy

Record Highs for Wall Street Quartet Lifts World Stocks

The New York Stock ExchangeThe New York Stock Exchange

World stocks rode the slipstream of the first joint all-time high for Wall Street’s four main markets since 1999 on Tuesday, with commodity firms adding extra lift as they eyed an OPEC oil output cut and surge in US building under Donald Trump.

A powerful earthquake hitting the same part of Japan that suffered a nuclear disaster in 2011 nudged up the safe-haven yen and cooled the dollar’s recent 10% gain which had lifted it to a 13-1/2 year high in recent days, Reuters reported.

A sustained rally in oil and metals helped the likes of the Australian and Canadian dollars as US stock index futures also pointed to an extension of Wall Street’s post-US election rally after its 16-year milestone on Monday.

“The fact Trump was elected means it is now seen as certain that you will see a rise in inflation and that the Fed is going to hike rates,” said Nataxis head of equities strategy Sylvain Goyon. “Some of his strategies are really pro-growth.”

Asia’s top bourses had made solid gains overnight despite the clearest signal yet from US president-elect Trump that he will shake up trade with the region.

Europe also spent the day on the front foot, with London’s FTSE, Frankfurt’s DAX and the CAC 40 in Paris up between 0.6—0.8% ahead of US trading.

The European basic resources index, which has now doubled from its January lows, was the best performing sector as big names Anglo American, BHP Billiton and Antofagasta jumped 4 to 5%.

Having surged 4% on Monday, oil prices were nudging $50 a barrel again. Benchmark bonds meanwhile were taking a break from the surge in yields and plunge in prices since Trump’s unexpected victory earlier this month.

The difference between German and US bond yields were back near multi-decade extremes after two of European Central Bank’s top policymakers reaffirmed the bank’s commitment to its mass stimulus program ahead of a flagged review next month.

The dollar was beginning to claw higher as New York FX trading resumed. It was back level against the yen at 110.85 and was on top again against the euro and sterling at $1.06 per euro and $1.242 to the pound.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3%, pulled up by a 1.3% rally in Australian shares. Korean shares and Hong Kong stocks rose 0.9% and 1.3% each.

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