Dow Jones Hits New Heights

Dow Jones storms past 20,000 points for first time ever

This week, the Dow Jones breezed through the 20,000 point barrier for the first time, with global markets on the whole reaching a 19-month high period.

It is believed that the optimism within American markets is underpinned by President Trump’s proposed pro-business growth policies, with a keen eye on reviving American industries and minimising red tape for domestic manufacturers.

The Dow Jones has rallied for some time since President Trump’s surprise presidential election success over Democrat candidate, Hilary Clinton, peaking this week by a rise of 0.73 per cent to 20,057.89 and an overall increase of 10 per cent since November 2016.

Rapid Dow Jones Surge

It’s some turnaround since the 2009 crash of the Dow Jones when it dropped off a cliff towards 5,000 points. However, the rise from 19,000 to beyond 20,000 points took the Dow Jones less than two months to occur, after it took some 483 trading sessions to rise from 18,000 points to 19,000 points due to the uncertainty prior to Trump’s inauguration.

Those who benefitted most from the latest Dow Jones rally include global investment banks, JP Morgan and Goldman Sachs, rising by 26 and 34 per cent respectively. However, there is a danger that President Trump’s intention to provide fiscal stimulus throughout the American economy could spark a considerable inflation rise and subsequent interest rate increases.

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USD Does Not Keep Pace

Surprisingly, the dollar has been weak in recent weeks, resulting in the pound moving up by 0.8 per cent to $1.26 against the dollar for the first time since 14th December.

Neil Wilson, of ETX Capital, said: “It’s psychologically huge and, after a bit of pullback ahead of the inauguration, really confirms that the ‘great rotation’ from bonds to stocks is definitely upon us.

“Fears about protectionism are running second to optimism about inflation and growth – for now at least.”

On the other side of the Atlantic, global stocks continued to enjoy a ‘Trump-bump’. The MSCI’s global share index soared by 0.3 per cent to a 19-month high of 434 points. The German DAX also reached record-high levels not seen since May 2015, the CAC in France grew by 0.99 per cent, and Britain’s FTSE 100 experienced modest growth of 0.2 per cent.

Dow Jones Volatility

Perhaps as a sign of things to come, the record high for the Dow was short lived. President Trump’s immigration clampdown caused any feel good factor to be short lived. Some major tech corporations including Google, have even taken steps to oppose the executive order.

With Trump very capable of shooting from the hip, market swings will almost become a regular theme. The Dow Jones has now dipped back below 20,000, but remains buoyant.