Surging US Shares and Global Markets: Optimism Drives Record Highs Amidst Vaccine News and Political Transition
US shares achieved fresh records on Tuesday, with the Dow Jones index surpassing 30,000 points for the first time, fuelled by hopes of a robust economic recovery and the resolution of political uncertainties. The S&P 500 also hit an all-time high as investors showed interest in economically sensitive financial and energy stocks.
The positive momentum in trading can be attributed to the encouraging news regarding Covid-19 vaccines and the initiation of the presidential transition by Joe Biden. European markets also experienced a significant boost, with London's FTSE 100 closing up 1.5%.
President Donald Trump's approval of the formal transfer of power following Biden's election victory, combined with positive vaccine updates, has instilled hope that the US and global economies may return to normalcy in the coming year. Asian markets mirrored the positive trend, with Japan's Nikkei rising nearly 2% and Hong Kong's Hang Seng Index gaining 1.4%. South Korea, Australia, New Zealand, and Singapore also saw slight upticks in their respective indexes.
The anticipation of a vaccine's availability next year has raised expectations of a demand resurgence in the new year, according to Phil Flynn, a senior analyst at Price Futures Group in Chicago. Ross Mayfield, an investment strategy analyst at US-based Baird, emphasized that stock markets have demonstrated resilience in looking beyond bad news when there is optimism on the horizon, as evidenced by the year 2020.
Market sentiment was further bolstered by reports indicating that Biden intends to nominate former Federal Reserve chief Janet Yellen as the treasury secretary. This development has been well-received by analysts, contributing to the positive outlook.
Notable gainers among major Wall Street shares included Boeing, which rose 3.3%, and Chevron, up 5%. Investment banks Goldman Sachs and JPMorgan Chase closed up 3.8% and 4.6%, respectively. Other significant gainers encompassed Disney, American Express, and IBM. Tesla's shares surged, pushing the electric carmaker's market value above $500 billion.
At the closing bell, the Dow Jones stood at 30,046.2, marking a 1.54% increase, while the S&P 500 gained 1.62% to reach 3,635.4. The tech-heavy Nasdaq index rose by 1.3% to 12,036.7.
Oil prices experienced an upswing, with US crude climbing 4.25% to $44.89 a barrel and Brent rising 4% to $47.89. In contrast, the price of gold, often favoured during times of investor fear, fell 1.6% to $1,806 per ounce.
Despite the bullish sentiment in the market, concerns remain as Covid-19 cases surge in the US and millions of Americans remain unemployed. Some analysts caution that shares may be due for a reality check. Rising Covid-19 cases and delays in implementing economic stimulus measures are seen as potential red flags, according to James McDonald, the chief executive of Hercules Investments.
The surge in shares extends beyond the US, as evidenced by the pan-European STOXX 600 index rising by 0.91% and MSCI's global stocks gauge gaining 1.44%, on track to reach a record high.
As the markets continue their upward trajectory, individuals must consider whether to trade or invest, weighing their risk tolerance and investment goals against market volatility and potential returns.