US stocks hit new high after Trump agrees $900bn stimulus

Gains followed a broad rise across European markets

US president Donald Trump had shocked many lawmakers last week when he rejected the $2.3 trillion legislation. Photograph: Bloomberg

US president Donald Trump had shocked many lawmakers last week when he rejected the $2.3 trillion legislation. Photograph: Bloomberg

 

Global equity markets rose on Monday, with US stocks hitting a new all-time high, after US president Donald Trump belatedly agreed to sign a bill to inject $900 billion (€737 billion) of stimulus into the world’s largest economy.

Wall Street’s S&P 500 index climbed 0.8 per cent by lunchtime, surpassing a previous peak it hit earlier in December. The Nasdaq Composite advanced by a similar margin.

The gains followed a broad rise in Europe, where Germany’s Dax index gained 1.5 per cent to exceed the high it reached in February before the pandemic shook global markets. The Europe-wide Stoxx 600 rose 0.7 per cent and France’s CAC 40 advanced by 1.2 per cent. London markets were closed for a bank holiday.

Mr Trump had shocked many lawmakers last week when he rejected the $2.3 trillion legislation, which in addition to the stimulus measures also included funding to keep the government open through the end of next September and avoid a shutdown that was set to start after midnight on Monday.

Refused to sign

Steven Mnuchin, US treasury secretary, had negotiated the bill with lawmakers, but Mr Trump initially refused to sign it into law. The president demanded that Congress increase the direct payment cheques sent to Americans from $600 to $2,000 per individual. Mr Trump said late on Sunday he still planned to make a push for that increase.

Despite the delay, Goldman Sachs economists said the stimulus measures were about $200 billion bigger than they had forecast and accounted for about 4 per cent of US economic output. The Wall Street bank now expects the US economy to grow at an annualised pace of 5 per cent in the first quarter of next year, up from its previous forecast of 3 per cent.

“The new path implies meaningfully higher levels of output in all four quarters and lifts 2021 annual growth to 5.8 per cent,” Goldman said. – Copyright The Financial Times Limited 2020