The Dow Jones Industrial Average gained nearly 300 points on Wednesday to close about 21,000 for the first time ever. The S&P 500 also broke records on Wednesday, trading briefly above 2,400 before ending the day with a very respectable 1.4 percent gain.
Trump’s “America first” speech undoubtedly had significant influence on the U.S. markets, providing traders with hopes for economic stimulus as well as tax reforms. Further encouraging data came on Wednesday by way of personal income reports which showed a 0.4 percent increase in January as well as an optimistic report from the Fed’s Beige Book. The global manufacturing PMI data for February reflected the highest rates in six years.
Expectations for a Fed rate hike in March nearly doubled on Wednesday, with analysts expecting a 70 percent chance of a rate hike. A March rate hike would be an expression of policymakers’ confidence in Trump’s ability to implement his plans and would give companies the opportunity to spend more on credit which would further increase the country’s economic growth.
Asian Markets and Currency Movements
Asian shares reacted to the increased rate hike potential by trading higher on Thursday. Japan’s Nkkei 225 gained 13 percent to hit 14-month highs while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.7 percent.
On the currency markets, the dollar rose 0.2 percent against the yen, while the British pound hit a six-week low of $1.2261 following renewed Brexit fears and disappointing data out of the UK on Wednesday. The euro slipped 0.2 percent to $1.0529.