The Iseq index in Dublin rose on Tuesday to reach its highest levels since Brexit and the Dow Jones Industrial Average topped 19,000 points for the first time ever in New York as US presidential-elect Donald Trump’s stimulus policies continued to buoy shares globally.
The Irish benchmark index rose as much as 1.16 per cent to 6,331.04, leaving it just 40 points off where it was before UK voters decided to quit the EU in June. The index was up 0.8 per cent in mid-afternoon trade.
Meanwhile, the DJIA index on Wall Street rose 0.3 per cent to a new record high of 19,013.
In Dublin, insurer FBD added 4.1 per cent and Bank of Ireland gained 4.7 per cent on growing optimism that Mr Trump's economic policies – what are become known as Trumponomics – will lift inflation, interest rates and bond yields.
In other European markets, energy and mining stocks were in demand as oil prices advanced on talk Opec will agree to cut output next week. The pan-European Stoxx 600 index gained 0.4 per cent in early trading.
Corporate earnings
“We can move on to pricing in the improving outlook,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank in Bonn. “There are strong signs that the US economy is in good shape, and that bodes well for corporate earnings.”
Equities are advancing on speculation that the world’s largest economy is strong enough to withstand higher borrowing costs. The market-implied odds of a Federal Reserve hike next month reached 100 per cent for the first time on Tuesday, according to Bloomberg calculations based on futures.
Meanwhile, Mr Trump issued a video overnight outlining his policy plans for his first 100 days in office, promising to issue a note of intent to pull out of a trade deal involving 12 countries on the Pacific Rim.
He also said he would cancel restrictions on producing energy in the US, particularly oil and “clean coal”, which would create “many millions of high-paying jobs”.
US interest rates
Bonds climbed across Europe, finding relief after weeks of being whipsawed by political headlines and speculation about higher US interest rates. With the next European Central Bank policy decision due next month, investors are looking for clues in recent remarks from officials who pledged to maintain current levels of monetary stimulus.
A 0.7 per cent increase in the value of Ireland's 10-year government bonds sent the yield, or market interest rate, down by 0.10 percentage points to 0.87 per cent. – Additional reporting: Bloomberg
