The Dow Jones blasted past the 25,000 barrier this morning to land – at time of writing, 3.30pm – at 25,093. A milestone and a +25% rise in the benchmark US share index in the last 12 months.
Much of the positive share sentiment is built on a much more congenial Trump-led tax code revamp for American businesses. There's also timely cyclical support from a global economy firing strongly on all cylinders.
Witness the FTSE 100 finishing at just four points shy of 7,700 tonight with +5.4% gains for NMC Health and a +3.2% share gain for G4S. Debenhams however sank more than -14% today on this morning's grim Christmas sales update and profits warning. Debenhams' news gave M&S the jitters also, down more than -3.5%.
The Dow also got a dollop of support from strong US jobs numbers: ADP non-farm change data arrived at 250,000 as opposed to nearer an expected 180,000 (more below on this) plus better Markit PMI numbers for December.
The more robust US numbers weren’t able to block sterling’s progress, up +0.33% to 1.3555 mid-afternoon London time against the dollar while the euro surged almost +0.60% to 1.2083, pushing the pound down -0.30%.
European stocks were fellow US travellers in spirit with the German Dax rising almost +1.5% and the French CAC 40 up +1.6%. Yesterday the MSCI Emerging Markets Currency Index – a collection of emerging market currencies – hit its highest level since early 2013, and there could be more headroom to come, for both currencies and equities.
“With the backdrop of continued earnings growth for emerging markets as a whole, and a number of tailwinds powering the sector forward,” Ross Teverson from Jupiter Asset Management told the FT, “we believe a strong case can still be made for emerging and frontier market equities”.
- UK FTSE 100 7,695.88 +0.32%
- DAX 13,153.28 +1.35%
- CAC 40 5,407.76 +1.43%
- Dow 25,082.16 +0.64%
- S&P 500 2,726.19 +0.49%
- Nasdaq 7,082.30 +0.24%
- Nikkei 225 23,506.33 +3.26%
- Gold 1,317.10 -0.11%
- Oil WTI 61.69 +0.05%
US jobs boost will add to Fed rate move
Earlier today new private sector US jobs numbers came in at 250,000 for December, significantly better than had been expected though some of the extra hirings would have been seasonally related i.e. extra Christmas staff.
The better-than-expected data will cement the resolve of the US Federal Reserve to raise interest rates. Given that rates remain – still – at 1.5% despite several rises, the Fed will be under pressure to put things on a more ‘normal’ footing as fast as it can decently manage it.
The US Bureau of Labour Statistics (BLS) offers up its own numbers tomorrow which look likely to be less strong in comparison. Both numbers keep within reasonably tight tramlines of each other though the BLS is more wide-ranging. Both numbers are only estimates.
However both figures have become increasingly more significant and closer to public consciousness given President Trump’s vaunted aim to return more Americans back to work.
Westinghouse revived by Brookfield
This afternoon news came through that Westinghouse, Toshiba’s US nuclear arm, will be saved with a new takeover deal. Though Westinghouse went into administration last March Canadian investment company Brookfield today committed to a $4.6bn takeover.
“We look forward,” said Cyrus Madon, CEO of Brookfield Business Partners in a press release, “to bringing our significant expertise and reputation as a long-term owner and operator of critical infrastructure in the U.S. and globally, as well as our deep facilities management capabilities, to enhance the Company’s position as a leading global infrastructure services provider.”
The deal will be subject to Bankruptcy Court approval.