Dubai:

Global stocks continued to march towards a new peak on Wednesday, pushed with news of a rate hike from Janet Yellen.

The possibility of an interest-rate increase as soon as March triggered buying in global equities looking for highest risk investments even as the dollar rose for a eleventh straight day to hit its highest level in three and a half years.

“It is politics and statements by central banks that are influencing the market movement today and it is not related to fundamental at all. If it was related to fundamental we would have not seen these kind of levels,” said Nadi Bargouti, Managing Director — Head of Asset Management at Emirates Investment Bank. “This rally has been momentum or sentiment driven. Economic indicators which are improving along with an improvement in sentiment that is driving the markets,” he added.

MSCI’s benchmark global equity index rose 0.25 per cent to 442.4 points, its highest since May 2015, near its record high.

The Dow Jones Industrial Average was 0.08 per cent higher at 20,519.89, while the S&P 500 index was down 0.05 per cent at 2,336.31.

FTSE 100 Index was 0.38 per cent higher at 7,296.05. The Euro Stoxx 600 index was 0.11 per cent higher at 370.65. Earlier in Asia, Japan’s Nikkei closed more than 1 per cent higher at 19,437.98. The Hang Seng Index closed more than 1 per cent at 23,994.87.

Locally, the Dubai Financial Market General index closed 0.21 per cent lower at 3,645.01. The Abu Dhabi Securities Exchange general index closed 0.53 per cent higher at 4,596.69.

The dollar index gained further to register its best winning streak in daily terms since 2012. The dollar index, which is a basket of currencies, was up 0.33 per cent at 101.56.

However, Bargouti feels that there has been unjustified optimism, and going ahead markets may have to take a breather.

“Market is getting ahead of itself. We are not expecting a crash but we think the market is factoring in a significant improvement in earnings and we are not there yet. The economy is improving but not to the extent that will justify these valuations,” Bargouti said.

Cautious on gold:

Gold fell for a fifth straight day weighed by strong dollar.

“The gold market remains torn between the outlook for rising interest rates in the United States and economic uncertainties related to president Trump’s policies,” said Carsten Menke, Commodities Research Analyst at Julius Baer.

International gold was down 0.58 per cent at $1,221.01 an ounce.

“We remain cautious given our expectation for solid growth, rising interest rates and a strengthening US dollar but acknowledge the Trump-related upside risks,” Menke said.

Brent crude was down 0.32 per cent at $55.79 per barrel, while NYMEX WTI was down 0.38 per cent lower at $53 per barrel.