US equities register another peak

Markets count on Trump administration moves to boost growth and therefore company earnings

All major US equity indices struck another peak yesterday as Trump trades re-emerged again on hopes of a tax cut in coming weeks by the new administration.

The Dow Jones Industrial Average struck a record of 20,379, before trading 0.49 per cent higher at 20,368.21. The S&P 500 was up 0.39 per cent higher at 2,325.09, after hitting a record of 2,325.

“Markets have been on a roll. It’s in anticipation of the proposals that president Trump will put out on taxes,” Saleem Khokhar, head of equities at NBAD’s asset management group told Gulf News. This has also been underpinned by strong earnings from US companies despite a stronger dollar.

Equity markets in the US have been on a record breaking streak on expectations that the new policy announcements from the president Donald Trump will boost economic growth, and therefore profits.

UBS expects that tax reforms could add another 5-12 per cent growth in US earnings. “This should support our overweight in US equities,” Max Kunkel, ultra high net worth investment strategist at UBS Wealth Management told Gulf News in an email.

The new peaks are ahead of the US Federal Reserve chief Janet Yellen’s testimony to Congress, the first under the new administration.

“Markets will wait for clear direction from Yellen on rate increase going forward,” said Khokhar.

“The outlook is strong but we may see volatility due to the extent of gains we have seen. The expectation is for equity to continue to strengthen through 2017.”

The Fed had earlier said that they need more evidence on the ground before a rate hike. The next meeting is due in March.

Earlier in the session, European and Asian equities also edged higher. The Euro Stoxx was up 1.25 per cent at 3,311.80. The German DAX was up 1 per cent at 11,798.74. The FTSE 100 index was 0.49 per cent higher at 7,294.04. The MSCI emerging market index was up 0.56 per cent at 935.66.

Regional markets bucked the trend. The Dubai Financial Market General Index closed 1.75 per cent lower at 3,637.55.

Oil prices fell as US crude production surged, countering a fall in output from Opec cuts. Brent crude was down 1.66 per cent to be at $55.76 per barrel, while West Texas Intermediate was down 1.37 per cent lower at $53.12 per barrel. Gold was down 0.92 per cent at $1,222.28 an ounce.