Surging Dow to boost ASX ahead of reporting season
Jan 27 2017 by Elias Hubbard
The Dow Jones Industrial Average hit 20,000 in trading Wednesday, marking a historic high and continuing a giddy post-Trump run-up that has seen the major indexes break records nearly every day since the election.
The Dow Jones rose 0.6% to 19,912.7, and the S&P 500 rose 0.7% to 2,280.07.
As Trump moved to cut regulations and promote infrastructure projects during his first week in office, investors were betting that the new USA president will follow through with business-friendly plans like cutting taxes, the Journal noted.
Experts warn that the Dow is fundamentally flawed as a market index and that while the 20,000 mark is a welcome psychological boost, it's hardly a harbinger of sustainable market prosperity.
The post-election rally reignited this week following a solid start to earnings season and optimism over U.S. President Donald Trump's pro-growth initiatives, giving the benchmark S&P 500 its best two-day performance in seven weeks and catapulting the Dow above the historic level.
It finally happened - the Dow Jones Industrial Average tops 20,000 for the first time ever.
"Risk-On" strategies drove bonds lower, sending the 10-year Treasury's yield to 2.5% from 2.4% on Tuesday.
Earnings are expected to show growth of 6.8 percent in the fourth quarter, their biggest increase in two years.
In fact, the strategist thinks the stock market of 2017 resembles the golden era following World War II and the boom years of President Ronald Reagan's presidency.
The move since Nov 22, when the index closed above 19,000 for the first time, has been spearheaded by financial stocks - with Goldman Sachs and JPMorgan accounting for about 20 per cent of the gain. If Trump fails to pave the way for the policies the market wants, the Dow may have difficulty staying above the 20,000 milestone. 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.
In morning trading in the United States, the index added around 0.5 per cent to surpass the psychologically important threshold and take its gains since this time a year ago to 23.8 per cent, according to Thomson Reuters data.
The US dollar, which has strengthened considerably since Trump's election, has weakened slightly this week against the basket of 10 currencies, except the Australian dollar which was fetching US75.68¢ late on Thursday afternoon.
Sterling rose 0.6 percent to $1.2595, the day after Britain's Supreme Court ruled that the government would need approval from parliament before formally triggering the country's departure from the European Union. Gold for February delivery dropped $4.80, or 0.4%, to finish the session at $1,210.80 an ounce. "Stocks with higher prices have a far greater influence on the Dow, regardless of the actual worth of the company". The NASDAQ 100 has also closed at a new record high, trading to a high of 5104, and closing at 5100.