The gains came after the S&P and Nasdaq hit new records in New York as traders turned their attention back to the strong recovery
Equities rose again on Friday, building on the week’s global rally, after US lawmakers and the White House agreed a bipartisan deal on infrastructure that will provide another huge cash injection into the world’s top economy.
The gains came after the S&P and Nasdaq hit new records in New York as traders turned their attention back to the strong recovery from last year’s collapse and away from the expected taper of Federal Reserve monetary policy.
Optimism across trading floors was already buoyant after a number of central bank officials calmed worries that they will tighten economic measures too quickly.
But buying was given an extra boost by news that Joe Biden had reached an infrastructure deal worth nearly $1 trillion with lawmakers that could lead to the biggest spending in decades on roads, bridges, ports and broadband.
Politicians had come together and forged an agreement that will create millions of American jobs, and modernise our American infrastructure to compete with the rest of the world and own the 21st century, he said at the White House.
He also stressed that it met his requirement of not raising taxes on anyone making less than $400,000 a year. We’re going to do it all without raising a cent in new taxes, he said.
Infrastructure spending strengthens an already very strong economic growth outlook, said Jeff Buchbinder, at LPL Financial. Those investments will bolster the outlook for corporate profits and should keep this bull market going strong well beyond 2021.
Asian bourses were on course to end the week on a strong note investors after the deal, with Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila, Jakarta and Wellington all rising.
And there is a broad view that the passage of the bill will likely fuel further gains for equities.
The positive market tone recognises the potential growth benefits of the compromise, but with the smaller size tempering some of the tax implications to pay for it, said Kerry Craig, of JP Morgan Asset Management.
Bolstering the support for the US economic and market outlook, many consumers are flush with cash, the labour market is improving, wage growth is increasing, business capital expenditure intentions and corporate expansion plans are rising and we have more clarity on the fiscal outlook, Craig said.
He added that while the Fed was now moving towards tapering its bond-buying programme, it was likely to move only gradually.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.