Global equity prices rallied and the Dow Jones Industrial Average blew past the psychological 20,000 level on Wednesday, lifted by strong Japanese trade data, robust earnings and hopes that U.S. President Donald Trump will press ahead with a large fiscal spending package.
The rally in stocks boosted U.S. Treasury debt yields, but lingering concerns about growing protectionism and the potential negative effects on global trade and growth pushed the U.S. dollar lower.
MSCI’s world index, which tracks shares in 46 countries, hit a 19-month high, up 0.76 percent.
Data showing Japan’s exports rising for the first time in 15 months in December and strong corporate results in Europe boosted the index. Rallying U.S. stocks pushed it higher.
The Dow, which came within a point of the 20,000 level on Jan. 6, had struggled to top it as investors looked for more clarity on the new U.S. administration’s policies.
Strong earnings numbers and renewed focus on Trump’s pro-growth initiatives, however, reignited a post-election rally and pushed the three major benchmark U.S. stock indexes to record highs.
“The Trump rally was reignited because he went from promise to process, so you’re seeing some executive orders which are the first order of business,” said Art Hogan, chief market strategist at Wunderlich Securities.
Trump has made several business-friendly decisions since taking office on Friday, including signing executive orders to reduce regulatory burden on domestic manufacturers and clearing the way for the construction of two oil pipelines.
Sentiment was also lifted by better-than-expected fourth-quarter earnings. Of the 104 S&P 500 companies that have reported results so far, nearly 70 percent have beaten earnings expectations, according to Thomson Reuters I/B/E/S.
The Dow Jones Industrial Average rose 145.75 points, or 0.73 percent, to 20,058.46, the S&P 500 gained 16.52 points, or 0.72 percent, to 2,296.59 and the Nasdaq Composite added 49.00 points, or 0.87 percent, to 5,649.96.
European shares rose sharply, boosted by strong earning updates from Logitech and Banco Santander. Europe’s broad FTSEurofirst 300 index closed up 1.31 percent at 1,448.08.
Rallying stocks sent U.S. Treasury debt yields higher, with benchmark yields hitting multi-week highs. Bonds yields hit session highs following weak demand at a $34 billion auction of five-year notes, part of this week’s $88 billion of sales in coupon-bearing government debt.
Benchmark 10-year Treasury notes were down 16/32 in price to yield 2.530 percent, up from 2.471 percent, late on Tuesday.
The rush to own stocks also eroded bullion’s safe-haven attraction and gold prices fell to a 1-1/2-week low. Spot gold was down 0.88 percent to $1,198.12 an ounce.
In currencies, the dollar failed to carry on its upward momentum from Tuesday, and hit a roughly seven-week low against a basket of major currencies, on lingering concerns about trade protectionism.
“Rather than hearing about fiscal stimulus, which I think most people assume is the gateway to higher interest rates and a stronger dollar, out of the gate from Trump we’ve heard about building a wall and trade protectionism,” said David Gilmore, partner at FX Analytics in Essex, Connecticut.
The dollar index, which measures the greenback against a basket of six other major currencies, was down 0.3 percent to 100.05.
Oil prices settled little changed, reversing earlier losses even after data showed a build in U.S. crude inventories, reinforcing traders’ sentiment that oil is trapped in a range by expected OPEC production cuts and U.S. output growth.
Brent crude settled down 36 cents, or 0.65 percent, at $55.08 a barrel, and U.S. crude settled unchanged at $53.18.