US stocks hit a record high overnight following news of a provisional trade agreement between the American and Chinese governments.
The S&P 500 index rose above 3,300 for the first time in its history to set a new record, having set multiple records since November.
The biggest risers were the large technology companies, which rose by an average of 1.8 per cent.
The performance of the stock market was also boosted by several banks, including JP Morgan which posted the largest ever profits from a US bank, and Morgan Stanley.
As a result of the rally, Alphabet, the parent company of Google, became the fourth US company to reach a valuation of $1trn (£764bn)
Josh Mahony, senior market analyst at IG Group,said the trade agreement announced this week between the US and China “disproportionally benefits” US equities.
He said: “For all the hope that the eventual trade deal will spark a resurgence in global growth, this first phase instead sees $200bn of additional Chinese purchases of US goods and services in exchange for a slight reduction in tariffs currently imposed on Chinese goods.
"Many tariffs barriers to trade remain, and with tariffs on Chinese goods approximately 20 per cent higher than pre-trade war levels, there is precious reasoning for global exporters to believe the Chinese engine of global growth is about to get back into full flow.”
Kevin Boscher, chief investment officer at Ravenscroft, the £7.6bn wealth management firm that is backed by Hargreaves Lansdown co-founder Steve Lansdown, said US equities were likely to continue to perform well in 2020 as economic growth in the country is higher than in most other parts of the world, while interest rates remain low, and companies are engaged in share buybacks, which boosts share prices.
This week FTAdviser published aCPD guide to the US equity market, which is available here.
david.thorpe@ft.com
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