Dow hits 20,000 as Trump trade reignites

World stocks hit a 19-month high on Wednesday, 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.
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 Industrials came within 51 points of the elusive 20,000 mark.
“It is time dust off those Dow 20k hats again, because the Trump rally is well and truly back on,” said Neil Wilson, 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 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 2016 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 favor of expanding energy infrastructure.
He also met chief executives of the Big Three US automakers 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.
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. It was as low as 1.14 percent on Monday.
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 and new debt supply.
In currencies, the dollar failed to carry on its upward momentum from Tuesday.