January 25, 2017

Dow Set To Open On Verge Of 20,000 As Trump Trade Sends Global Stocks To 19 Month Highs

The day the Dow crosses 20,000 may finally be here, because with DJIA futures trading 65 points higher in premarket trading, added to yesterday's close of 19,912 and latest record high in the S&P, it means that all it will take is a modest of only 25 points for the critical Dow threshold to be finally breached. Celebrating the upcoming record, world stocks hit a 19-month high on Wednesday, lifted by strong Japanese trade data, strong European company earnings and hopes that U.S. President Donald Trump will press ahead with a large fiscal spending package. In short: the Trumpflation rally is back with a bang (even if the dollar is not particularly enjoying it, although the decoupling between the USD and rates was duly noted yesterday so it isn't too surprising).

"U.S. stocks have shown renewed signs of life this week, as the market toyed with the idea of reigniting the 'Trump rally' that we saw in the aftermath of the presidential election," said Kathleen Brooks, research director at City Index.  "Wednesday's key theme is the return of the 'Trump trade'," Brooks said. 

In early trading, European equities extended the global rally as corporate earnings reignited investors’ optimism in economic growth with construction  companies outperforming on expectations Trump will announce the "massive" Mexican wall.

The MSCI All-Country World Index rose to 433.6, up 02%, to its highest level since June 2015 as equity markets from Tokyo to London climbed after the S&P 500 Index closed at a record. BHP Billiton Ltd. paced gains in resources shares and iron ore extended a rally. A surge in industrial metals bolstered raw-materials companies, while gold declined for a second day.  The yen edged higher after sliding Tuesday. The Aussie fell after weaker-than-expected inflation data, while oil retreated after a four-day advance.

Europe's index of 300 leading shares and Germany's DAX both rose 1 percent and Britain's FTSE 100 was up 0.7 percent.  Spanish bank Santander was among the big gainers in Europe, its 4 percent rise in 2016 net profit giving its share price a similar boost and leading the continent-wide rally in bank stocks, despite some disappointing data out of the German IFO survey which missed on both expectations and conditions.

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