Record highs for Wall Street quartet send
other stocks higher
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[November 22, 2016]
By Marc Jones
LONDON (Reuters) - World stocks on Tuesday
rode the slipstream of the first joint all-time high for Wall Street's
four main markets since 1999, while oil prices hit their highest level
A powerful earthquake hitting the same part of Japan that suffered a
nuclear disaster in 2011 nudged up the safe-haven yen. The dollar
slipped off a six-month high as the rally in oil and metals prices also
drove up commodities-linked currencies such as the Australian dollar.
Asia's top bourses had made solid gains overnight despite the clearest
signal yet from U.S. President-elect Donald Trump that he will shake up
trade with the region.
Europe's main bourses were quickly on the front foot too with London's
FTSE, Frankfurt's DAX and the CAC 40 in Paris up between 0.6 - 0.8
percent in early trade.
The European basic resources index, which has now doubled from its
January lows, was the best performing sector as big names Anglo
American, BHP Billiton and Antofagasta jumped 4 to 5 percent. [.EU]
Stocks are benefiting from a belief that Trump spending policies will
"The fact Trump was elected means it is now seen as certain that you
will see a rise in inflation and that the (Federal reserve) is going to
hike rates.", said Nataxis head of equities strategy Sylvain Goyon.
"Some of his strategies are really pro growth."
Having surged 4 percent on Monday, oil prices were nudging $50 a barrel
again. Russian President Vladimir Putin raised hopes that producers will
agree to limit output at an OPEC meeting next week. [O/R]
Benchmark bonds meanwhile were taking a break from the surge in yields
and plunge in prices since Trump's unexpected victory earlier this
The difference between German and U.S. bond yields were back near
multi-decade extremes after two of European Central Bank's top
policymakers reaffirmed the bank's commitment to its mass stimulus
program ahead of a flagged review next month. [GVD/EUR]
"The return of inflation toward our objective still relies on the
continuation of the current, unprecedented level of monetary support, in
spite of the gradual closing of the output gap," ECB President Mario
Draghi said at a hearing in Strasbourg.
The bank is also likely to be wary about the uncertainty if Italy's
government, as opinion polls currently suggest, loses a referendum on
constitutional changes just days before the ECB meeting.
The dollar's dip was a modest 0.3 percent but marked its second day in
the red having snapped a 10-day and 10 percent rise against the yen on
Monday that had taken it from 101 yen to over 111. It was hovering at
110.71 by 0945 GMT (4:45 a.m. ET) .
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A man looks at an electronic board showing the stock market indices
of various countries outside a brokerage in Tokyo, Japan, November
16, 2016. REUTERS/Toru Hanai
Trump, outlining plans on Monday for his first day in office next
year, pledged to withdraw from the TPP Asia-Pacific free trade
Such a move may lead to retaliation by trade partners such as China
and could potentially derail markets, Libby Cantrill, head of public
policy at bond giant PIMCO, said.
But for now, expectations that Trump's administration will adopt
expansionary fiscal policies have pushed developed market stocks
higher and even emerging market shares seem to have settled over the
last week having initially been hit hard.
Overnight, MSCI's broadest index of Asia-Pacific shares outside
Japan rose 1.3 percent, pulled up by a 1.3 percent rally in
Australian shares. Korean shares and Hong Kong stocks rose 0.9 and
1.3 percent each.
Investors in Japanese stocks also appeared unfazed by Tuesday's
earthquake in northern Japan with the benchmark Nikkei average
closing up 0.3 percent.
"Most of the flow into stocks seems to be retail-oriented with
institutional investors preferring to sit out the rally unless they
get a clearer picture on Trump's economic team," said Andrew
Sullivan, managing director, sales trading at Haitong International
Securities Group in Hong Kong.
The dollar's mild weakness propped up gold prices with spot gold up
0.3 percent at $1217.70 per ounce. Gold prices have fallen 10
percent since the U.S. election outcome.
It also helped emerging market currencies trim some losses after a
recent battering. The Chinese yuan rebounded from a near 8-1/2 low
hit on Monday.
With markets moving higher, volatility indicators receded. The CBOE
Volatility Index, a so-called "fear gauge", fell 3.4 percent.
(Additional reporting by Saikat Chatterjee in Hong Kong)
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