US: Stocks hit records as global rally accelerates

[NEW YORK] Global stocks rallied again Tuesday, with US markets hitting new records, as worries about the British exit from the EU fade amid confidence in more central bank easing.

The headlines were most dramatic in the US, where both the Dow and S&P 500 hit fresh records and the tech-rich Nasdaq closed above 5,000 for the first time all year.

Bourses in Paris, Frankfurt, Tokyo, Hong Kong and Shanghai all gained between one and 2.5 per cent.

An exception was London, which finished marginally negative after the British pound strengthened at the unexpectedly quick selection of Theresa May as the new conservative leader.

Analysts said investors are scared to miss out on a big rally.

"It appears that the momentum trade is back again," said Briefing.com analyst Patrick O'Hare in a client note, describing "a market that seemingly has no inclination to dwell on the negatives".

Analysts have attributed the gains in the US to greater faith in the economic outlook of the world's biggest economy after Friday's strong June jobs report, combined with confidence the Federal Reserve will not hike interest rates anytime soon.

"It's clearly a liquidity-driven market, driven by a significant excess of US liquidity or domestic liquidity," said Hugh Johnson, an investment advisor in Albany, New York.

Markets have also gotten a lift from expectations of further easy-money policies as soon as Thursday, with a meeting of the Bank of England.

Expectations are also rising about a further stimulus in Japan after the ruling coalition of Japanese Prime Minister Shinzo Abe dominated a weekend parliamentary election.

The package could be worth around 10 trillion yen (S$131 billion), Japanese media said, while earlier reports put the possible amount at double that figure.

The gains in the US were fairly broad-based, with financials, technology, energy and industrials all posting solid advances, while "defensive" sectors such as utilities and consumer staples pulled back.

US Airlines were big gainers, as American Airlines surged 11.2 per cent, Delta Air Lines 5.5 per cent and United Continental 8.8 per cent following an upgrade from Deutsche Bank, which said the companies should benefit from a relatively solid US economy.

European banks were strong, with Deutsche Bank climbing 6.3 per cent, BNP Paribas 5.2 per cent and Barlcays 2.2 per cent.

In Germany, automakers raced forward after better-than-expected results for Daimler and strong sales for BMW. Shares in Mercedes-maker Daimler gained 4.4 per cent and BMW 4.7 per cent.

Nintendo once again barrelled higher as worldwide addiction to its blockbuster Pokemon GO game continued to spread. Shares of the entertainment company rocketed 12.7 per cent higher.

But gold producers were on the wrong end of Tuesday's trade, faltering as gold prices pulled back. Barrick Gold lost 6.4 per cent and Goldcorp 2.9 per cent.

AFP