Global stocks bonanza: Dow Jones at 21,000 as FTSE 100 hits new record high

 
Jasper Jolly
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The Dow Jones Industrial Average only broke 20k at the end of January (Source: Getty)

Stock indices around the world have hit more record highs, with the Dow Jones Industrial Average and FTSE 100 both jumping past their previous best levels after US President Donald Trump struck a more emollient tone in a speech to the US Congress.

London’s main index rose to close at 7,378.67 points, surpassing its previous peak hit in mid-January, a rise of 1.59 per cent over the course of the day.

Broad-based gains aided by the US dollar’s strength against the pound. The broader FTSE 250 index also gained from the dollar strength, to hit its highest all-time level and close just shy of 19,000 points.

The trade-weighted dollar index rose to its highest point since early January, pushing the pound briefly below $1.23 for the first time since late January.

Read more: Dow Jones hits longest streak since 1987 as it reaches 12th record close

The S&P 500, the most widely followed benchmark by professional investors, reached highs of 2,398.60 points at the time of writing.

The Dow, meanwhile, broke the 21,000-point mark barely a month after reaching 20,000 points for the first time. It gained almost 1.5 per cent at the time of writing, with only two of the index's members losing ground.

The Dow started 2016 at 17,425 points, dipping at the start of the year below 16,000. However, a rally since February accelerated after Donald Trump was elected US President, breaking new ground.

While the Dow is not closely followed by professional investors because of its almost arbitrary selection of 30 stocks and, crucially, its lack of weighting to market capitalisation, its long history nevertheless makes it a highly symbolic measure of the fortunes of corporate America.

The Trump trade which has inflated stocks in America showed no signs of abating despite the President again failing to deliver the detail on his fiscal policies investors crave.

Read more: Trump promises "new chapter of American greatness" in speech to Congress

While there were some hints the President may be coming round to a border adjustment tax, heavily penalising companies importing from abroad in a bid to reshore manufacturing, Trump did not explicitly say he would pursue this policy.

He repeated his pledge from his campaign to spend $1 trillion on infrastructure, with a more explicit move towards trying a mix of public and private capital, rather than straight up investing.

In the absence of long-awaited policy detail, investor attention was caught instead by speeches from Federal Reserve officials which strongly suggested a March rate hike is a strong possibility.

Read more: Yep, US GDP growth was 1.9 per cent last quarter

The influential head of the New York Federal Reserve, Bill Dudley, said in an interview with CNN that the case for tightening has strengthened recently, prompting investor expectations of higher rates to rise sharply for the meeting on 15 March.

Kit Juckes, global strategist at Societe Generale, said: "If the Fed likes to have the market price a move in before they act, they have now cleared themselves a path, with odds of 80% implied by fed funds futures."

A March rate rise would likely trigger further dollar strength, which could also boost the FTSE 100 at the expense of the pound.

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