Friday, 24 February 2017
Global stocks hit record highs on job, tax-cut hopes, oil gains
Stock prices climbed to record highs worldwide for a third straight session on Thursday, propelled by an oil rally after a surprise drop in U.S. crude inventories and comments from U.S. President Donald Trump and his Treasury chief on plans for job creation and tax reform.
The dollar was bogged down a day after minutes from the Federal Reserve's latest policy meeting showed the U.S. central bank was in no rush to raise interest rates.
Treasury and euro zone government bond yields declined as European Central Bank policymakers also signaled they were not getting carried away by signs the euro zone economy is gathering strength.
This outlook for policy accommodation lifted gold prices to a three-month high near $1,250 an ounce.
Equity markets around the world have advanced this year as traders bet on tax cuts, less regulation and more infrastructure spending from Trump and the Republican-controlled Congress to bolster the U.S. economy.
Details on these stimulus programs have been sparse, raising doubts whether bigger corporate profits will materialize.
On Thursday, U.S. Treasury Secretary Steven Mnuchin spoke of wanting to see "very significant" tax reform passed before Congress' August recess and said the Trump administration was looking closely at border tax issues.
"That's starting to put some details on tax reform. That's reigniting some of the animal spirits," said Bill Northey, chief investment officer for the private client group at U.S. Bank in Helena, Montana.
Trump told executives at major U.S. companies he has a plan that includes tax cuts and infrastructure spending to create millions of domestic jobs.
The MSCI world equity index, which tracks shares in 46 nations, rose 0.15 percent to 446.69 after touching a record peak at 447.67.
On Wall Street, the Dow Jones Industrial Average booked an all-time intraday high for a 10th straight day, while the S&P 500 touched a record high before retreating. Nasdaq fell for a second day, suffering its biggest one-day loss so far in February.
The Dow ended up 34.72 points, or 0.17 percent, at 20,810.32; the S&P 500 finished 0.99 point, or 0.04 percent, higher at 2,363.81 and the Nasdaq Composite closed down 25.12 points, or 0.43 percent, at 5,835.51.
Europe's broad FTSEurofirst 300 index finished 0.2 percent lower at 1,470.18, scaling back from a 14-month peak set on Wednesday.
Tokyo's Nikkei ended down 0.04 percent.
Gains in energy shares due to a jump in oil prices helped lift the equity market.
Brent crude settled 74 cents or 1.33 percent higher at $56.58 a barrel. U.S. crude settled up 86 cents or 1.6 percent at $54.45.
A weaker dollar in the wake of Fed minutes that were perceived as less hawkish whetted appetite for gold and bonds.
The dollar index slipped 0.3 percent to 100.96.
The benchmark 10-year U.S. Treasury note yield hit a two-week low, last down 3 basis points at 2.388 percent. The German 10-year Bund yield decreased 4 basis points at 0.233 percent, hovering at its lowest level since early January.
Spot gold rose $11.52 or 0.93 percent, to $1,248.83 an ounce.
Reference: Richard Leong