TORONTO – Investors on Wall Street sent the Dow Jones soaring to an all-time record high Thursday, as the markets viewed the looming U.S. presidency of Donald Trump as good news for business spending.
In New York, the Dow Jones industrial average climbed 218.19 points to 18,807.88, capping off four straight days of gains. The previous record was 18,636.05, set on Aug. 15.
The party atmosphere in capital markets is in sharp contrast to what had been expected in the weeks and days leading up the historic U.S. election on Tuesday, where it was largely predicted that Trump would lose to Democrat candidate Hillary Clinton.
But as the stunning decision continues to sink in for the world’s largest economy, traders are warming up to the idea of a Republican president whose campaign promise included plans to spend large sums of money on infrastructure.
“At this point, the market is painting a pleasant scenario,” said Patrick Blais, a senior portfolio manager at Manulife Asset Management.
“Given that we have a Republican president that is aligned with Republicans in the House, it is very plausible that he will commit to his program of fiscal spending to drive growth.”
Blais said that stock markets had been forecasting a worst case scenario in the event of a Trump victory, but now seems to have backed away from that forecast because the president-elect seems much more subdued post-election than he was during his campaign.
This has helped calmed fears of uncertainty in the markets.
“Sure we can point to the positives but there are definitely some negatives associated with the new president,” he added.
“Were the negatives just bluster and will he tone down or will he be more constrained in more of his outlandish, negative views — whether it be on trade, on immigration. That can have some very serious negative impacts.”
The strength wasn’t felt throughout Wall Street though.
The broader S&P 500 was flat, ahead by 4.22 points to 2,167.48, while the tech-heavy Nasdaq composite was down 42.27 points at 5,208.80.
In Toronto, lower gold prices weighed, pulling the S&P/TSX composite index into negative territory for the first time this week.
Canada’s largest stock market was down 15.66 points at 14,744.25, with gold miners leading decliners.
The Canadian dollar fell for a second day as it continued to feel pressure from declining oil prices, a stronger U.S. currency and worries about the U.S. president-elect’s plans regarding free-trade agreements.
“We don’t expect the U.S, if they were to revisit NAFTA, to incorporate any major changes but I think just the possibility is leading to some weakness in the Canadian currency,” noted Blais.
The loonie lost 0.58 of a U.S. cent to 74.17 cents US, while the December crude contract fell 61 cents to US$44.66 per barrel.
Other commodities were mixed with the December gold contract losing $7.10 to US$1,266.40 an ounce, December natural gas dipping six cents to US$2.63 per mmBTU, and December copper setting a new 15-month record, climbing nine cents at US$2.55 a pound.
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Note to readers: This is a corrected story. A previous version had the incorrect TSX closing number.