A gauge of global equity markets advanced yesterday and bond yields rose, lifted by a re-emergence of assets likely to benefit from reflationary policies that are expected to be implemented by US  President Donald Trump.

Financials and banks led equities on Wall Street higher as investors bet Mr Trump’s tax reform plans and softer regulatory environment will boost economic growth and corporate profits.

“It’s interesting and it’s very important that the financials are on the leading edge of the reflation trade,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

“If you look at the financials, the primary reason we are seeing outperformance on their part, that speaks directly to the Trump reflation trade.”

Investors were also encouraged by the two-day US-Japan summit held over the weekend apparently having ended smoothly without President Trump talking tough on trade, currency or security issues.

The Dow Jones Industrial Average rose 125.57 points, or 0.62 per cent, to 20,394.94, the S&P 500 gained 10.34 points, or 0.45 per cent, to 2,326.44 and the Nasdaq Composite added 28.61 points, or 0.5 per cent, to 5,762.73.

MSCI’s all-country world index advanced 0.46 per cent and was on track for its fourth straight advance.

Europe’s broad FTSEurofirst 300 index gained 0.9 per cent after hitting its highest level since December 2015.

US Treasury yields rose as investors looked ahead to testimony by Federal Reserve Chair Janet Yellen today and tomorrow when the Fed Chair gives her semi-annual Humphrey Hawkins testimony before lawmakers in Washington.

Benchmark 10-year notes US10YT=RR were last down 10/32 in price to yield 2.4448 per cent, up from 2.41 per cent late on Friday.

The dollar also moved to a near three-week high against a basket of major currencies on expectations the reflationary policies would stoke economic growth and the possibility the Fed could be more aggressive in hiking interest rates.

Comments from Mr Trump that he plans to announce what he said would be the most ambitious tax reform plan since the Reagan era in the next few weeks rekindled hopes for big tax cuts.

In commodities, copper hit its highest levels since May 2015 after shipments were shut off from the world’s two biggest copper mines – due to a strike in Chile and an export’s ban by Indonesia.

Oil prices dipped slightly after strong gains on Friday in the wake of an Opec report showing high compliance by members in a production cut while signs of rising US  crude output continued to weigh on prices.

International benchmark Brent crude futures fell 1.9 per cent to $56.65 per barrel and US  crude lost 1.6 per cent to $52.98.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.