Equity markets continued their advance yesterday and a gauge of world stocks notched a record for a second straight session, spurred by speculation about US tax reform and relief at French election results.
Wall Street built on gains in the prior session, with the Nasdaq Composite index breaching the 6,000 mark for the first time.
Recent opinion polls have centrist Emmanuel Macron, who won the first round of the French presidential election, with a comfortable lead over far-right, anti-EU candidate Marine Le Pen in a May 7 run-off vote.
Safe-haven assets such as gold and the Japanese yen retreated, while the yield gap between French and German short-term government bonds, a closely watched measure of political risk in the euro zone, hit its lowest in almost three months.
Bets on clarity regarding the tax code helped boost US stocks, according to Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
“(Treasury Secretary Steven) Mnuchin has to have a better-articulated answer to what the tax code changes are in a meaningful way,” she said, adding that markets were still in relief-mode after Sunday’s French election results.
“The EU is going to hang together most likely.”
With concern over French elections on the wane, investors turned their focus to corporate earnings and US President Donald Trump’s promise to announce “a big tax reform and tax reduction” today.
The Dow Jones Industrial Average rose 241.14 points, or 1.16 per cent, to 21,005.03, the S&P 500 gained 14.57 points, or 0.61 per cent, to 2,388.72 and the Nasdaq Composite added 37.92 points, or 0.63 per cent, to 6,021.73.
The pan-European FTSEurofirst 300 index rose 0.27 per cent and MSCI’s gauge of stocks across the globe gained 0.62 per cent after touching a high of 456.34.
French shares were up 0.2 per cent, after a 4.1 per cent surge on Monday, their biggest daily gain since August 2012.
The euro added to Monday’s gains against the dollar, up 0.6 per cent to $1.0932.
The Canadian dollar fell 0.8 per cent to C$1.3611 per US dollar after the United States announced new duties averaging 20 per cent on Canadian softwood lumber imports.
Gold, also seen as a safe-haven asset, fell. Spot gold dropped 0.6 per cent to $1,267.18 an ounce. US gold futures fell 0.65 per cent to $1,269.20 an ounce.
Oil prices continued to slump as doubts about Opec’s ability to reduce global crude inventories put the price on track for its six fall in seven days.
US crude fell 0.26 per cent to $49.10 per barrel and Brent was last at $51.57, down 0.06 per cent on the day.