New York: The Dow powered to a fresh record close Thursday on continued momentum from President-elect Donald Trump’s election win as the surprise result prompted swings in some global markets.
The surge in the US blue-chip index reflected hopes Trump’s pro-business policies will boost growth and help certain sectors. The US market’s bullish response also prompted a 6.7 rise in the Japanese Nikkei, reversing significant losses the prior day.
But Mexico’s stocks and peso plunged for a second straight day amid fears Trump will follow through on campaign pledges he will insist on renegotiating the North American Free Trade Agreement (NAFTA), as well as pressure the country pay billions of dollars for a giant border wall.
Brazil’s Bovespa also suffered a big hit, falling 3.3 per cent.
US investors, however, were encouraged by the tone of Trump’s acceptance speech late Tuesday in which he emphasized infrastructure spending, growth and jobs and omitted any reference to trade conflicts.
Analysts have warned that Trump’s rise could usher in a period of great uncertainty, given campaign promises to overhaul US economic and foreign policies, including slapping huge import tariffs on China. But markets have mostly shrugged off worries so far.
“We believe markets are moving as if the US will certainly enter a fiscal-driven upturn without stumbling over protectionism,” said a note from JPMorgan Chase.
Lloyd Blankfein, chief executive of Goldman Sachs, told a conference in New York that Trump’s policies would be “market supportive” and that he was hopeful.
“I’m going to see how it goes before I grow mournful,” he said.
Big tech weakens
London underperformed its European peers, losing over 1 per cent, as investors fled high-dividend stocks “which are looking less attractive after the pickup in US bond yields”, suggested Chris Beauchamp, chief market analyst at IG.
Frankfurt and Paris posted slight losses.
“People wanted to catch their breath and slow down after yesterday’s exceptional gains,” Andrea Tueni, an analyst at Saxo Banque in Paris, told AFP.
One shift in the US compared with Wednesday’s immediate post-election rally was a retreat in large technology stocks. The Nasdaq finished 0.8 per cent lower.
Apple fell 2.8 per cent, Amazon 3.8 per cent, Google parent Alphabet 2.9 per cent, Facebook 1.9 per cent, Microsoft 2.4 per cent and Netflix 5.5 per cent.
Analysts said the tech pullback was partly due to a rotation to other sectors and partly to worries the industry could suffer under Trump policy changes.
Art Hogan, chief market strategist at Wunderlich Securities, said Trump’s stance during the campaign created concerns about how new policies could affect the technology sector.
“The rhetoric around the large technology companies is neutral to negative,” Hogan said.
“If we ever get back to that rhetoric that’s more protectionist, that doesn’t help people that manufacture a bunch of their products overseas, or companies that are putting smaller companies out of business.”
