Comments from two Federal Reserve presidents have fuelled talk of an interest rate hike, boosting the dollar
New York (AFP) - Leading stock exchanges romped higher Wednesday, with US markets roaring to fresh records and the dollar advancing, after President Donald Trump struck a more conciliatory note in a major address Tuesday night.
Trump's speech to Congress restated campaign themes on his aim to crack down on illegal immigration and adopt a tough negotiating style with trade partners. But he avoided much of the harsh language he has often employed, appearing more "presidential" in the words of some pundits.
"The president last night was very presidential and he gave a lot of hope," said JJ Kinahan, chief market strategist at TD Ameritrade. "It was the positive tone and vision that people wanted to see."
US equities immediately vaulted to fresh records at the start of the trading day, and later added to the gains. The Dow ended up 1.5 percent or over 300 points at 21,115.55, breaking 21,000 for the first time ever.
London and Frankfurt also set new all-time highs, while Paris climbed a lofty 2.1 percent.
Tokyo gained 1.4 percent, benefiting from optimism over Trump and also from a retreat in the yen against the dollar.
The dollar also rose against the pound and the euro as investors bet on an early Federal Reserve interest rate rise after two top US central bankers suggested a rate increase this month was on the cards. Inflation data also reaffirmed that expectation.
Higher interest rates would make holding dollar-denominated assets more attractive, stoking demand for the greenback.
"The dollar is kicking some serious butt," tweeted Mati Greenspan, Senior Market Analyst at eToro.
- Light on details -
Investors took heart from the remarks that Trump and Republicans in Congress would succeed in enacting major pro-growth policies, including a signficant tax cut that has been the source of much of the market's upward movement since election day.
"There's some hope that this will increase the potential for him to get through tax reforms and infrastructure spending and the other things the markets want to see," said Karl Haeling of Landesbank Baden-Wuerttemberg.
Still, analysts noted Trump's speech was short on details. A Federal Reserve survey released Wednesday cited worries among businesses, including the auto and agriculture industries, about the possible negative effects of Trump's agenda.
"The stock market is accounting for a very rose-colored outlook that's allowing for tax reform that's not going to be negative," said Patrick O'Hare, an analyst at Briefing.com.
Craig Erlam at Oanda, said, "It's difficult to say how long they will be willing to tolerate so much talk and no action but for now at least, it appears investors have faith in him to deliver even if it's going to take longer than planned."
Large banks continued to score outsized stock price gains, boosted by optimism about Trump's plan as well as signals a hike in interest rates could be imminent.
Bank of America, JPMorgan Chase and Wells Fargo all jumped more than three percent.
- Key figures around 2200 GMT -
New York - Dow: UP 1.5 percent at 21,115.55 (close)
New York - S&P 500: UP 1.4 percent at 2,395.96 (close)
New York - Nasdaq: UP 1.4 percent at 5,904.03 (close)
London - FTSE 100: UP 1.6 percent at 7,382.90 points (close)
Frankfurt - DAX 30: UP 2.0 percent at 12,067.19 (close)
Paris - CAC 40: UP 2.1 percent at 4,960.83 (close)
EURO STOXX 50: UP 2.1 percent at 3,390.20
Tokyo - Nikkei 225: UP 1.4 percent at 19,393.54 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 23,776.49 (close)
Shanghai - Composite: UP 0.2 percent at 3,246.93 (close)
Euro/dollar: DOWN at $1.0550 from $1.0579
Pound/dollar: DOWN at $1.2294 from $1.2381
Dollar/yen: UP at 113.69 yen from 112.75 yen
Oil - Brent North Sea: DOWN 15 cents at $56.36 per barrel
Oil - West Texas Intermediate: DOWN 18 cents at $53.83 per barrel