Wall Street hit records highs for a second day and the dollar rose on hopes of business-friendly tax cuts, as upbeat Chinese trade data buoyed commodity-related shares in Asia and Europe.
The equities boost continued a day after US President Donald Trump said that in the coming weeks he would announce something “phenomenal” in terms of tax, although he offered no further details.
Renewed speculation that Mr Trump’s policies will help boost economic growth and inflation pushed US Treasury yields higher and lifted the dollar, which hit an 11-day high against a basket of six major currencies.
The greenback also rose on the expectations of a constructive meeting between Mr Trump and Japanese Prime Minister Shinzo Abe.
Strong Chinese trade numbers yesterday added to a sense that inflationary pressures could be stirring. China stocks posted their biggest weekly gains in more than two months, led by infrastructure and material shares on new pledges for transport and infrastructure building.
China’s President Xi Jinping also had a cordial telephone conversation with Mr Trump, in which the US president affirmed the one-China policy on Taiwan.
Both the blue-chip CSI300 index and the Shanghai Composite Index were about 0.5 per cent higher.
The Dow Jones Industrial Average rose 65.34 points, or 0.32 per cent, to 20,237.74, the S&P 500 gained 5.23 points, or 0.23 per cent, to 2,313.1 and the Nasdaq Composite added 12.84 points, or 0.22 per cent, to 5,728.02.
Benchmark US 10-year Treasury note yields rose to a session high of 2.43 per cent after the release of the imports data, which showed prices increased 0.4 per cent in January.
European shares were off the day’s peaks, weighed down by banking shares. They are still poised to close the week about one per cent higher.
Healthy corporate results and the continued uptick in European deal-making, which is seeing its strongest start to the year in more than a decade, helped underpin valuations.
Reckitt Benckiser has agreed to buy US baby formula maker Mead Johnson Nutrition for $16.6 billion, giving the British consumer goods company a new product line and expanding its presence in developing markets.
Meanwhile, analyst sentiment on European earnings is the brightest it has been in six years, while US fourth-quarter earnings are forecast to grow 8.5 per cent, according to Thomson Reuters I/B/E/S.
In commodities, oil prices extended gains supported by strong Chinese crude imports, as well as reports that Opec members delivered more than 90 per cent of the output cuts they pledged.
Benchmark Brent crude was 2.00 per cent, or $1.11, higher at $56.74 per barrel. USWest Texas Intermediate (WTI) crude was trading 1.85 per cent, or 98 cents, higher at $53.98.