Dow Industrials Poised to Extend Gains
February 23 2017 - 9:25AM
Dow Jones News
By Riva Gold
The Dow Jones Industrial Average was on track for a 10th
consecutive day of records Thursday, extending its longest streak
of all-time highs in three decades.
Futures pointed to a 0.2% opening gain for the blue-chip index,
following muted sessions in Europe and Asia.
Hopes for stronger growth, higher inflation and friendly fiscal
policy from the new U.S. administration have fueled the recent
rally.
Treasury Secretary Steven Mnuchin told CNBC Thursday that the
Trump administration is committed to boosting U.S. economic growth
to at least a 3% annual rate and that tax overhaul remained top of
the agenda.
"Growth momentum has improved since last summer, and on top of
that, the biggest economy in the world has a new president saying
he's willing to spend money," said Florian Ielpo at Swiss fund
manager Unigestion.
"We're still very positive on the world economy, not only
because of what's happening in the U.S. right now with leading
indicators spiking up, but Europe seems to be doing decently and
emerging markets seem to have stabilized if not improved," he
added.
Data showed earlier this week that the eurozone economy is
growing at its fastest rate in more than six years.
Some investors were more cautious, however, noting stocks were
getting expensive despite a range of political risks on the
horizon.
"It feels to me like the market is pricing in a lot more
optimism than it should be," said David Lafferty, chief strategist
at Natixis Global Asset Management.
"We have the most controversial president in history, the U.K.
is leaving the EU, there are existential risks in France, high
valuations...and volatility is low," he said.
Stocks in Europe were little changed Thursday, but waning
concerns around the French election offered relief to French
government bonds and the euro.
Centrist candidate François Bayrou announced his offer of an
alliance with independent centrist Emmanuel Macron on Wednesday,
helping diminish some investors' fears of a victory for anti-euro
candidate Marine Le Pen.
French 10-year yields fell to 0.970% from 1.025% Wednesday,
while their German counterparts fell to 0.255% from 0.272%. The
euro was last up 0.2% at $1.0570 after snapping a three-session
losing streak on Wednesday.
The pan-European Stoxx Europe 600 index was up 0.1%, as
investors weighed gains in the oil and gas sector against a decline
in bank shares.
Brent crude oil jumped 1.8% to $57.04 a barrel, while gold rose
1.2% to $1,248.20 an ounce. Copper futures fell 0.6% to $5,989.50 a
ton.
Global investors were also digesting the latest Federal Reserve
meeting minutes released Wednesday, where officials suggested that
lifting U.S. interest rates "fairly soon" may be appropriate in
light of an improving economy.
The minutes did little to lift expectations for a rate rise in
March. The WSJ Dollar Index was last down 0.2%, extending
Wednesday's declines, while 10-year Treasury yields edged lower to
2.391% from 2.416%.
Arthur Kwong, head of Asia Pacific equities at BNP Paribas
Investment Partners, said the firm is trying to stick with its
assumption that there will be three rate increases this year, "but
I think the feeling is getting more there may be only two."
Banks and financials mostly declined across Asia amid
disappointment there wasn't a clearer signal on rate rises, causing
Japan's Nikkei to end flat and Hong Kong's Hang Seng Index to shed
0.4%. Higher interest rates tend to boost banks' profitability.
Shanghai shares pulled back on losses in infrastructure stocks,
as well as reports that the government plans to ban futures
companies from asset-management businesses -- though analysts are
skeptical that it will carry out such drastic measures.
--Ese Erheriene,
William Horobin
,
Yifan Xie
, Nick Timiraos and Hiroyuki Kachi contributed to this
article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
February 23, 2017 09:10 ET (14:10 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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