US shares hit new highs after Trump permitted a $ 900 billion stimulus

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Global stock markets rose Monday, and US stocks hit new all-time highs after President Donald Trump belatedly signed a bill to boost the world's largest economy by $ 900 billion.

Wall Street's S&P 500 index rose 1 percent in afternoon trading, beating an earlier high it hit in early December. The Nasdaq Composite gained 0.9 percent.

"Typically, markets are solid for the new year," said Quincy Krosby, chief market strategist at Prudential Financial. However, data showed that "the first quarter of new [US] administrations through 1920 can be tough for markets," and further uncertainty arose from Georgia’s January 5 runoff elections for the US Senate, which were “too tight”. were calling, ”added Ms. Krosby.

Nonetheless, abundance of liquidity and rock-bottom interest rates continued to provide a favorable environment for equities, and "all indicators are optimistic," she added.

The gains followed a broad spike in Europe, where the German Dax index rose 1.5 percent to beat the high it hit in February before the pandemic rocked global financial markets. The Europe-wide Stoxx 600 rose by 0.7 percent and the French CAC 40 by 1.2 percent. London markets were closed for a public holiday.

Mr Trump shocked many lawmakers last week when he opposed the $ 2.3 billion piece of legislation, which included funding in addition to stimulus measures to keep the U.S. government open until the end of September and avoid a shutdown should start after midnight Monday.

Steven Mnuchin, US Treasury Secretary, had negotiated the bill with lawmakers, but Mr. Trump initially refused to include it in law. The president urged Congress to increase the direct payment checks sent to Americans from $ 600 to $ 2,000 per person. Mr Trump said late Sunday that he was still planning to push for that increase.

Despite the delay, Goldman Sachs economists said stimulus measures were about $ 200 billion higher than forecast and accounted for about 4 percent of US economic output. Wall Street Bank now expects the US economy to grow 5 percent on an annualized basis in the first quarter of next year, compared to its previous forecast of 3 percent.

"The new path implies significantly higher production levels in all four quarters and increases annual growth to 5.8 percent in 2021," said Goldman.

Dennis DeBusschere, head of the portfolio strategy research team at Evercore ISI, said the US stimulus package, last week's UK-EU trade deal, and low interest rates were "catalysts" that would enable stocks to "keep rising" create.

He said that while the January 5 runoff elections in Georgia, which could determine control of the upper chamber of Congress, were a source of uncertainty, "investor comfort increases with the near-term outlook."

In currencies, the pound sterling was down 0.8 percent against the dollar on Monday to $ 1.3446, dragging the pound further away from the 2020 high of $ 1.3624 hit on December 17. The dollar index, which measures the value of the greenback against a basket of six currencies, rose 0.1 percent to 90.33.

The general risk appetite did not hurt the 10-year Treasury note, as it traded largely unchanged at 0.93 percent.

Investors said the Brexit trade deal removed one of the major uncertainties about the British pound, but significant work still needs to be done as it does not cover key industries like financial services.

"While this is one of the toughest Brexit outcomes, both parties can set up a collaborative platform and potentially make improvements," said Christian Keller, head of economic research at Barclays.

However, Mr Keller added that the UK bank "has remained cautious for the month ahead as bitter negotiations are likely to have left deep diplomatic scars on both sides of the [English] Channel".

In Asia, the stock markets rose. China's CSI 300 closed 0.4 percent, Tokyo's Topix 0.5 percent.

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