Posted: Wednesday, December 7, 2016 – 3:30 PM
(AFP ) European equities surged and US stocks hit fresh records Wednesday in anticipation the European Central Bank will extend its stimulus, and amid optimism about the American economy after the presidential election.
The buying spree was led by Frankfurt, where the main stock index hit a 2016 high, with London, Paris and Milan not far behind.
In the US, the Dow Jones Industrial Average surged to a record for the third straight session in the best day for Wall Street equities since the November 8 US election.
The US rally has been sparked by hopes President-elect Donald Trump and the Republican-led Congress will enact policies that fuel stronger growth and loosen regulation in the world’s biggest economy.
“Right now people are making bets based on potential and whether that potential becomes real, we’re not going to know for another six plus months,” said Michael James, managing director of equity trading at Wedbush Securities.
“The path of least resistance right now is higher.”
The European Central Bank is widely expected to prolong massive monetary stimulus Thursday to spur an economy crimped by a rise in political uncertainty as exemplified by Trump’s upset win, Brexit and the rise of the far right in Europe.
Italians’ rejection of constitutional reforms in a referendum Sunday did not roil markets as some observers had feared, but it means that worries over one of Europe’s weak spots will be prolonged.
“We don’t have increased market uncertainty, but we have political uncertainty,” ING Diba bank economist Carsten Brzeski told AFP.
Shares in crisis-hit Italian bank BMPS shot higher by nearly 11 percent on reports Italy’s government is preparing a plan of action should the lender’s own rescue efforts fail.
Other Italian banking stocks also rose sharply, as did many other financials across Europe.
- Trump slaps US pharma -In US markets, Boeing rose 1.3 percent as it pledged to control costs on the redesign of Air Force One after Trump blasted the aerospace giant for what he said were ballooning expenses.
But US pharmaceutical shares were the exception to the rally, after Trump told Time magazine he plans to crack down on runaway drug prices. Pfizer lost 1.2 percent, Amgen 2.7 percent and Mylan 3.8 percent.
Tokyo-listed SoftBank soared 6.2 percent to 7,387 yen, with investors hailing news the company agreed to invest $50 billion in the United States.
Trump announced the deal with much fanfare in the lobby of Trump Tower in New York, alongside SoftBank’s flamboyant CEO Masayoshi Son, and said it would create a staggering 50,000 jobs.
Son said the money will come from a $100 billion investment fund he is setting up with Saudi Arabia’s sovereign wealth fund and other partners, a move announced in mid-October.
Later in the day Taiwan tech giant Foxconn confirmed it is in “preliminary discussions” as part of the SoftBank investment deal.
- Key figures around 2200 GMT -New York – Dow: UP 1.6 percent at 19,549.62 (close)
New York – S&P 500: UP 1.3 percent at 2,241.35 (close)
New York – Nasdaq: UP 1.1 percent to 5,393.76 (close)
London – FTSE 100: UP 1.8 percent at 6,902.23 (close)
Frankfurt – DAX 30: UP 2.0 percent at 10,986.69 (close)
Paris – CAC 40: UP 1.4 percent at 4,694.72 (close)
Milan – FTSE MIB: UP 2.1 percent at 18,130.66 (close)
EURO STOXX 50: UP 1.2 percent at 3,138.24
Tokyo – Nikkei 225: UP 0.7 percent at 18,496.69 (close)
Hong Kong – Hang Seng: UP 0.6 percent at 22,800.92 (close)
Shanghai – Composite: UP 0.7 percent at 3,222.24 (close)
Euro/dollar: UP at $1.0755 from $1.0718 Tuesday
Dollar/yen: DOWN at 113.74 yen from 114.03 yen
Pound/dollar: DOWN at $1.2623 from $1.2678
Oil – West Texas Intermediate: DOWN $1.16 cents at $49.77 per barrel
Oil – Brent North Sea: DOWN 93 cents at $53.00 per barrel
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