Signs of a “more emollient tone” from Donald Trump towards Japan and China, along with news that the European commission had raised its growth forecasts for the eurozone and UK economies, combined to send global stock markets to new peaks on Monday.

In the US the Dow Jones industrial average, the S&P 500 and the Nasdaq composite, which had already been boosted in recent days by Trump’s promise of a “phenomenal” tax reform announcement in the next few weeks, all hit record highs following the president’s meeting with the Japanese prime minister, Shinzo Abe, over the weekend. The S&P 500 is now valued at a record $20trn.

The Dow closed at a record level of 20,412 having passed 20,000 for the first time last last month. Apple, the world’s most valuable company, also hit a new high of $133.29, surpassing a record set in February 2015, as investors bet on strong sales of the 10th-anniversary iPhone, expected later this year.

During the visit, Trump affirmed Washington’s “one China” policy. Abe and Trump also agreed to discuss a bilateral trade deal to fill the void created by the US withdrawal from the Trans-Pacific Partnership agreement.



Michael Hewson, chief market analyst at CMC Markets UK, said: “The initial belligerence of the Trump administration towards China and Japan appears to have given way to a more practicable way of doing things, and while peace may not have broken out quite yet, some welcome pragmatism does appear to be taking hold in Washington.

“While it’s too early to suppose that President Trump’s attitude won’t change, given his unpredictability, the more emollient tone does appear to be pacifying markets for now.”

Analysts also pointed to another reason for the strength in US markets. Jasper Lawler, senior market analyst at London Capital Group, said: “Investors are pricing in the benefits of a Goldman Sachs-led treasury department. Steve Mnuchin [who spent 17 years at the investment bank] is in the final hours of his confirmation as treasury secretary ... Donald Trump’s agenda of financial deregulation will likely have another supporter in the form of Mnuchin.”

Meanwhile the European commission’s raised forecasts for Europe’s economies helped to push German and French stock markets sharply higher despite the continuing concerns about forthcoming elections in both countries, as well as the renewed uncertainty over the Greek bailout programme.

Germany’s Dax ended 0.9% higher while France’s Cac climbed 1.2%. The Stoxx 600, an index of stocks from 17 European countries, added 0.85%, reaching its highest level since December 2015.

But with the pound holding firm ahead of inflation figures on Tuesday, UK markets underperformed their rivals.

Connor Campbell, financial analyst at Spreadex, said: “Analysts are expecting [the inflation figure to be] near the Bank of England’s targeted 2%. The prospect of such an upward CPI [consumer price index] swing, and the potential ramifications this has for a Bank of England rate hike, has helped the pound hold off the dollar while nabbing nearly half a percent in growth from the euro.”

The FTSE 100 – which is dominated by overseas earners and thus benefits from weaker sterling – closed up 0.28% at 7,278.

The more domestically focused FTSE 250 finished up 0.23% at 18,758, its fifth day of record closes. The index has been supported by signs that the UK economy has so far avoided the worst predictions made ahead of the Brexit vote.

Elsewhere, mining shares were among the biggest gainers as metal prices moved higher, partly on the expected benefits of Trump’s promised infrastructure spending plans and partly on recent positive figures from the Chinese economy, including a better than expected 7.9% growth in exports. On top of that copper hit its highest level in nearly two years as a strike at BHP Billiton’s Escondida mine in Chile – one of the two biggest in the world – continued.

