Strong eco­nomic data brings cheer to world stock mar­ket

Global share in­dex rises by 0.3 per­cent

The Star Early Edition - - BUSINESS REPORT - Jamie McGeever Lon­don

WORLD stocks hit a 19-month high yes­ter­day, lifted by strong Ja­panese trade data, stel­lar Euro­pean com­pany earn­ings and ex­pec­ta­tions that US Pres­i­dent Don­ald Trump will press ahead with a large fis­cal spend­ing pack­age.

The re­fo­cus on Trump’s poli­cies aimed at re­flat­ing the US econ­omy did not ex­tend as much to bond and cur­rency mar­kets, where US yields only inched up and the dol­lar fell across the board, par­tic­u­larly against a resur­gent Bri­tish pound.

MSCI’s global share in­dex rose 0.3 per­cent to 434 points, its high­est since June 2015, af­ter two of Wall Street’s main indices reached fresh peaks overnight.

Higher open

US fu­tures pointed to a higher open on Wall Street. On Tues­day the S&P 500 and Nasdaq both rose to fresh record highs and the Dow Jones in­dus­trial av­er­age came within 51 points of the elu­sive 20 000 mark.

“It’s time to dust off those Dow 20K hats again, be­cause the Trump rally is well and truly back on,” said Neil Wil­son, a se­nior mar­ket an­a­lyst at ETX Cap­i­tal. The post-elec­tion rally has tem­pered in re­cent days as in­vestors fo­cused on the White House’s trade pro­tec­tion pro­nounce­ments.

Europe’s in­dex of 300 lead­ing shares rose 1 per­cent and Ger­many’s DAX rose 1.4 per­cent to a fresh 18-month high, while the UK FTSE 100’s rise

It’s time to dust off those Dow 20K hats again, be­cause the Trump rally is well and truly back on.

was lim­ited to 0.3 per­cent by the strong pound.

Span­ish bank San­tander was among the big gain­ers in Europe, its 4 per­cent rise in last year’s net profit giv­ing its share price a sim­i­lar boost and lead­ing the con­ti­nent-wide rally in bank stocks.

Ja­pan’s Nikkei ad­vanced 1.4 per­cent, buoyed by data show­ing the coun­try’s ex­ports rose for the first time in 15 months in De­cem­ber, a pos­i­tive sign for the econ­omy even as talk of US pro­tec­tion­ism looms over the out­look.

Trump signed two ex­ec­u­tive or­ders on Tues­day to move for­ward with con­struc­tion of the Key­stone XL and Dakota Ac­cess oil pipe­lines, rolling back key Obama ad­min­is­tra­tion en­vi­ron­men­tal ac­tions in favour of ex­pand­ing en­ergy in­fra­struc­ture. He also met chief ex­ec­u­tives of the three big US car mak­ers to push for more cars to be built in the US.

“We are clearly see­ing a pro-busi­ness ad­min­is­tra­tion that is minded to ac­tion,” ETX Cap­i­tal’s Wil­son said.

Shifted fo­cus

Global bond yields rose as Trump shifted his fo­cus back to growth ini­tia­tives, in­clud­ing promis­ing cor­po­rate tax breaks to fuel US in­vest­ment, af­ter fo­cus­ing on pro­tec­tion­ism in his first few days in of­fice. The 10-year yield inched up to 2.48 per­cent, re­cov­er­ing from its dip be­low 2.40 per­cent ear­lier in the week, while the two-year yield held firm at 1.23 per­cent.

Euro­pean yields rose fur­ther. Ger­many’s 10-year Bund yield hit a six-week high of 0.38 per­cent and France’s bench­mark 10-year yield hit a one-year high of 0.95 per­cent with bond prices weighed down by the rally in stocks.

In cur­ren­cies, the dol­lar failed to carry on its up­ward mo­men­tum from Tues­day.

PHOTO: EPA

A money dealer takes a mo­ment dur­ing a morn­ing trade ses­sion in Tokyo on Tues­day, af­ter US Pres­i­dent Don­ald Trump’s for­mal with­drawal from the Trans-Pa­cific Part­ner­ship. Ja­pan’s strong trade data gave a boost to in­ter­na­tional mar­kets.

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