Wall Street’s S&P 500 hit a record high on Thursday as the rally in global markets after a series of dovish turns from central banks kept momentum.
The equities benchmark climbed as much as 1 per cent to a record intraday high of 2,956.2, but cooled its heels to be 0.3 per cent higher just after midday and about 10 points shy of its peak close on April 30.
The Dow Jones Industrial Average also struck a record intraday high, but tempered its rise to be 0.4 per cent higher. The Nasdaq Composite added 0.4 per cent, having risen as much as 1.3 per cent earlier in the day.
Energy, up 1.8 per cent, was the top performing sector in the S&P 500 as brent crude remained on course for one of its biggest one-day rises of the year. The jump in oil prices came after Iran’s revolutionary guard said it had shot down a US drone, raising tensions between Washington and Tehran.
Technology and industrials were the next-best performing sectors in the equities benchmark.
The Federal Reserve’s marked shift in language continued to set the pace. US government bond yields hit their lowest level since 2016 and the dollar extended losses on Thursday. The central bank dropped the word “patient” to describe its stance on rates and cited rising “uncertainties” for the economic outlook during Wednesday’s announcement.
The rally for US Treasuries continued for a second day. The yield on the 10-year US Treasury, which moves inversely to its price, fell below 2 per cent for the first time since November 2016 on Thursday, to a low of 1.9719 per cent.
The dollar index was down a further 0.5 per cent, following falls in the previous session on the Fed’s comments. China’s offshore renminbi strengthened by 0.5 per cent to Rmb6.86 per dollar. The euro rose by 0.6 per cent, to $1.129.
The pound stayed positive on Thursday after the Bank of England continued to point towards gradual interest rate rises, resisting the wider pattern in play among global monetary policymakers.
UK policymakers voted unanimously to hold fire on rates in a decision that was published alongside reduced growth forecasts and a warning that the perceived likelihood of a no-deal Brexit had increased.
Sterling was up 0.5 per cent at $1.2695 after the announcement, having hit a high of $1.2727 earlier in the day. It has fallen more than 4 per cent since early May in line with deepening political uncertainty over Brexit and the campaign to replace Theresa May as leader of the Conservative Party and prime minister. The BoE cut its growth forecasts, citing increased perceived risks of a disorderly Brexit.
The Bank of Japan joined the trend to point towards increasing risks to global growth as it left policy on hold. The wider pattern for a weaker dollar helped the yen to strengthen by 0.7 per cent to ¥107.34, its strongest since early January.