Late rally in New York, ends the week on a positive note

A late rally on Wall Street left the Dow Jones Industrial Average at an eleventh successive record closing high, although the underlying mood in the markets was one of caution amid growing doubts about President Trump’s economic policies and persistent concerns about European politics.

During the week the FTSE All-World share index, which hit a record intraday high of 295.96 on Thursday, but ended the week 0.4% down in late trade on Friday at 294.41, reflecting broad weakness for European and Asian stock markets.

Since the US election in November the global equity gauge has risen more than 8 per cent as growth bulls have taken heart from promises made by Donald Trump, US president, of fiscal stimulus, infrastructure spending and deregulation.

But a lack of clarity regarding the new administration’s economic policies appears to have put the “Trump reflation trade” on hold, for the time being at least — particularly after Steven Mnuchin, Treasury secretary, left markets wanting more after he spoke on Thursday.

In New York, the S&P 500 spent most of the day on Friday in negative territory before a late spurt higher left the US equity benchmark up 0.2% at a record closing peak of 2,367 — up 0.7% for the week. The Dow Jones Industrial Average ended at a record close for an eleventh successive session — the longest such run since 1987 — as it eked out a modest gain of less than 0.1% to 20,821.

In Europe the mood was more downbeat. The pan-regional Stoxx 600 fell 0.8% to its lowest close in two weeks and was slightly weaker over the fiveday period. Japan’s Topix fell 0.4%, while Hong Kong’s Hang Seng lost 0.6% and Australia’s S&P/ASX 200 was 0.8% lower, weighed down by materials stocks after a sharp fall for some base metal prices overnight. China’s Shanghai Composite was an outlier, but only just as it added 0.1%.

“French sovereign spreads widening to levels last seen in 2012 at the same time as a flight-to-quality bid pushes two-year German Schatz yields to record, negative, new lows reflects renewed fears of a euro break-up,” said Divyang Shah, global strategist at IFR Markets.

In commodities it was a choppy week in the oil markets which left Brent crude down 1% at $55.99 a barrel on Friday — but up 0.2% over five days. The dip for Treasury yields helped gold reassert its upward momentum, with the metal up $7 to $1,256 an ounce — the highest since just after the US election — and $21 higher for the week.