Thursday 5 December 2019

CRH lifted as Trump's stimulus rally revives

Donald Trump
Donald Trump
Donal O'Donovan

Donal O'Donovan

The Dow Jones Industrial Average traded above 20,000 for the first time on Wednesday, resuming a rally that began in the wake of US President Donald Trump's surprise election victory. The rally, which stalled ahead of last week's inauguration, was reignited by Trump's signing of numerous executive orders since taking office on Friday.

In Dublin, CRH was among the big gainers - with shares up more than 3pc to €34.38 each. The construction supplies group's US arm has been tipped to be a big winner from a ramp up in infrastructure spending under President Trump, including potentially his notorious plan to build a wall on America's southern border with Mexico.

Media coverage of Donald Trump's first days in office were dominated by his team's bruising encounters with the press. But markets have been lifted as investors refocus on Trump policies aimed at reflating the US economy.

German deputy Finance Minister Jens Spahn said on Wednesday that it was too early to judge the new US President, adding that his plans to increase state spending could give the global economy an extra push.

Spahn, a senior member of Chancellor Angela Merkel's conservatives, also said that a certain level of tax competition on business locations was positive, but that limits were needed. President Trump has said he'd introduce swingeing tax cuts to lure US corporations back home.

On the markets, MSCI's global share index rose 0.3pc to 434 points - its highest since June 2015 - after two of Wall Street's main indices reached fresh peaks.

"A seminal moment. It is just a number but it is a big number, it is certainly a flashy number," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

"There is a real belief that Trump is real, he has been extremely active these first couple of days of the presidency and a change may happen faster than people had thought."

If the index remains above 20,000 by closing time, the 42-session surge from the first close above 19,000 would mark the second-shortest length of time between such milestones.

Europe's index of 300 leading shares rose 1pc and Germany's DAX rose 1.4pc to a fresh 18-month high, while the UK FTSE 100's rise was limited to 0.3pc by the strong pound.

President Trump signed two executive orders on Tuesday to move forward with construction of the Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favour of expanding energy infrastructure.

He also met chief executives of the Big Three US automakers to push for more cars to be built in the United States.

However, lingering concerns about growing protectionism and the potential negative effects on global trade and growth remained close to the surface. In this environment, the outlook for the Federal Reserve is murky. (Additional reporting Reuters)

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