Dubai: Christmas seems to have come early for US equities, which hit a new peak last week.
The Dow Jones Industrial Average crossed the 24,000 mark last week, but snapped a five day gaining streak by ending 0.17 per cent lower at 24,231.59 on Friday. The S&P 500 index closed 0.20 per cent lower at 2,642.22.
“The US equities will be supported by the positive sentiment from US tax reforms. The done deal would be another reason for pushing the markets higher. This is a medal for Trump who has not been able achieve anything so far this year,” Naeem Aslam, chief market analyst with Think Markets told Gulf News from New York.
The Dow Jones Industrial Average has gained more than 18 per cent so far this year on the back optimism over growth and that feeding in the corporate earnings. With a tax cut now, UBS expects a further boost to indices and earnings per share of companies.
“Our upside case for the S&P 500 of 3,300 for 2018 assumes EPS {Earnings per share] gets a 10 per cent boost driven by a 25 per cent tax rate [+6.5%], repatriation [+2 per cent] and a GDP lift [+1.6 per cent], while the P/E [price to earnings] rises by 1 per cent,” Keith Parker, Omar Elangbawy, and Neal Burk, strategists at UBS said in a note.
More highs would mean markets will increase their performance compared to the previous December. Historical data shows that equities gave a positive 1.5 per cent returns in the last month of the year in the past 100 years.
“Going ahead, I don’t think markets will focus on Flyn. Markets will focus on US government shutdown and US payroll data,” Aslam said.
The pound
The pound climbed to $1.3549, the strongest level since September 25 last week. It has gained 1.37 per cent in the last week and is up 9.5 per cent for the 2017 year to date.
“The Brexit talks will support Sterling and we may see a level of 1.37 in coming weeks,” Aslam said.
New peak for Bitcoin
Bitcoin prices powered to a new high on Sunday after the major exchanges said they will launch futures in the crypto-currency in mid- December.
“The remarkable development on CME and CBOE front will help Bitcoin to move higher. The prices will continue towards 14,000 by the end of this year. The number may look very high, but Bitcoin recovered 90 per cent from a low in November,” Aslam said.
Bitcoin prices hit a new peak of $11,619.95 (Dh42,645.22) on Sunday, before trading 6.65 per cent higher at $11,619.95. The market cap stood at $194 billion.
