Following Tuesday’s news that the Federal Reserve is expanding its historic stimulus program, stocks markets across the globe rallied further.
Indeed, the world’s de facto central bank announced it will buy individual corporate bonds as well as exchange-traded funds it is already purchasing to support the U.S. economy, providing a ‘backstop’ or ‘floor’ for equities.
This additional stimulus was widely predicted by the markets and, as such, investors who have been monitoring the situation closely have been topping up their investment portfolios in recent weeks as entry points will undoubtedly continue on an upward trajectory moving forward.
As a result, shrewd investors will likely continue to boost their portfolios as this backing could potentially be maintained for several years, not just quarters.
Furthermore, it has also been reported that President Trump’s administration is getting ready to reveal an infrastructure package worth $1 trillion. This will inevitably further boost asset prices.
As I said last week, ahead of the Fed’s announcement, further stimulus introduced in the near future will support and bolster asset prices. Therefore, investors will be keeping a close eye on the opportunities before any further stimulus packages are announced.
Looking to the stock markets, the Dow Jones Industrial Average rose 526.82 points, or 2%, to end Tuesday at 26,289.98; the S&P 500 index added 58.15 points to close at 3,124.74, a 1.9% rise; whilst the Nasdaq Composite Index advanced 169.84 points, or 1.8%, to end at 9,895.84.
Across the pond, London’s FTSE 100 and Frankfurt’s Dax both increased 2.2% in morning trading on Tuesday and the pan-European Euro Stoxx 600 gained 2%.
In Asia-Pacific, Tokyo’s Topix jumped 4% and Australia’s S&P/ASX 200 gained 3.9%. Meanwhile, Hong Kong’s Hang Seng went up 2.4% while China’s CSI 300 index was 1.5% higher.
Indeed, there are not many things that can fuel markets like an additional injection of stimulus.
The message investors are reading from this latest round is that the Federal Reserve and U.S. government are willing to do whatever it takes to shore up the recovery.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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