World Stocks on a High as TrumpTradesBounce Back
London: World stocks and bond yields rose on Monday, lifted by a re-emergence of so-called “Trump trades” as investors bet that the US president’s tax reform plans will boost economic growth and corporate profits.
Following on from Friday’s record high closes on Wall Street, Asian stocks rallied to 1-1/2-year peaks and a broad measure of panEuropean stocks hit its highest since late 2015. The Japanese yen was the biggest underperformer among major currencies, as is typical when riskier assets such as stocks are doing well.
Investors were also comforted by the two-day US-Japan summit held over the weekend apparently having ended smoothly without President Donald Trump talking tough on trade, currency or security issues. “Trump-based ref lation pricing remains the major driver in the US stock markets, and thirsty investors are waiting for more details on Trump’s corporate tax cut plans,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group. The STOXX 600, Europe’s leading index of top 600 shares, rose 0.6% to 369.51 points, the highest in over a year. Germany’s DAX was up 0.9%, led by a 15% rise in drugmaker Stada after the company said it had received two offers for the acquisition of the company, one of which is private equity group Cinven Partners.
MSCI’s broadest index of AsiaPaci f ic shares outside Japan gained 0.5% while Japan’s Nikkei rose 0.4%. US futures pointed to a higher open on Wall Street. The S&P 500, Dow Jones Industrials and Nasdaq Composite all posted record closing highs on Friday. C o mment s f r o m T r u mp o n Thursday that he plans to announce what he said would be the most ambitious tax reform plan since the Reagan era in the next few weeks rekindled hopes for big tax cuts. Ec onomic d at a f r om major economies has also been upbeat, i nc lud i n g F r i d ay ’s Chi ne s e trade fig ures while US corporate ea r ni ngs have been a lso solid so far.
A woman carries an effigy of US President Donald Trump during a march to protest against Trump’s proposed border wall and to call for unity, in Mexico City on Sunday — Reuters