Saturday 21 October 2017

Markets rise as Trump trade reignited amid “synchronized expansion” in global economy

Markets rose on Friday.

The S&P 500 rose 0.5 percent to a record high after the US Senate passed a budget blueprint for the next fiscal year to pave the way for tax cuts.

The STOXX Europe 600 rose 0.3 percent despite continuing concerns over the issue of Catalonian independence from Spain.

The Nikkei 225 rose less than 0.1 percent ahead of an election on Sunday but that was still its 14th consecutive gain.

“The Trump trade has been reignited, so it seems. Tax reform is definitely back on—if it was ever off, thanks to the Senate approving of the Republican-backed budget Thursday night,” said Neil Wilson, senior market analyst at ETX Capital, in a note.

“The global economy has now entered a synchronized expansion for the first time in many years, and the usual macro fears are largely absent,” wrote Bill Miller, portfolio manager at Miller Opportunity Trust mutual fund on Wednesday. “This has underpinned a global bull market in stocks without (yet) triggering a significant rise in interest rates.”

“Low interest rates coupled with still solid earnings growth suggest valuations can remain high amid a tame business cycle, absent an exogenous shock,” said Third Point's Dan Loeb.

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