Monday 28 October 2019 4:59 pm

S&P 500 hits all-time high on trade and Fed optimism

The US’s benchmark S&P 500 stock index hit an all-time high today as investors were cheered by a possible breakthrough in the US-China trade negotiations and with the Federal Reserve likely to cut interest rates on Wednesday.

Read more: Microsoft beats Amazon to Pentagon’s $10bn cloud computing contract

The index was also lifted by Microsoft shares hitting a record high of close to $146 after it was awarded the Pentagon’s $10bn (£7.7bn) cloud computing contract.

Wall Street’s S&P 500 rose about 0.7 per cent shortly after opening to hit 3,044. This took it beyond the index’s last intraday record of 3,028 at the end of July.

Investors’ spirits were lifted over the weekend by news that US and Chinese officials are “close to finalising” parts of a trade deal, according to a joint statement.

The trade war between the world’s two biggest economies has knocked economic confidence around the world and has given US stock markets a volatile time in 2019.

Nonetheless, a decade of so-called quantitative easing (QE) bond-buying by the Fed has pushed up asset prices. The central bank’s decision to cut interest rates at its last two meetings have recently provided stock markets with a sugar rush.

The Fed meets again on Wednesday. Many investors expect it will opt for a third 25 basis point (0.25 percentage point) cut in a row, which has also boosted markets.

“The upbeat sentiment comes as earnings season carries on, plus the US-China trade talks are heading in the right direction,” said David Madden, market analyst at CMC Markets.

“President Trump said he expects to sign a trade pact with China in the Asia-Pacific Economic Cooperation meeting next month. Things haven’t gone smoothly in the negotiation process but for now, the relations appear to be the best they have been in months.”

Read more: Donald Trump reveals phase one trade agreement with China

Marking the S&P’s record, Trump tweeted: “The S&P just hit an ALL TIME HIGH. This is a big win for jobs, 401-K’s, and, frankly, EVERYONE! Our Country is doing great.”

(Image credit: Getty)