Stock rally pushes Dow Jones to record 30,000 | Business


The Dow Jones Industrial Average broke the 30,000 mark for the first time as financial markets around the world rally in hopes of a coronavirus vaccine and a smooth transition to a Joe Biden presidency.The benchmark for the Wall Street market comes as investors bet rapid medical advancements will bring the Covid epidemic to an earlier-than-expected end, paving the way for a rapid economic rebound next year as the Commercial activity will return to closer to normal and strict government restrictions will be relaxed.

The rally also comes after the United States General Services Administration (GSA) declared Biden the apparent winner in the United States election, paving the way for the formal transition of Donald Trump’s administration, ending weeks of uncertainty and late.

Nonetheless, Trump was quick to claim credit for the rally. “It’s a sacred number, 30,000. No one thought they would ever see it,” he said in an extremely brief press conference. “This is the 48th time that we have broken records under the Trump administration.”

He went on to congratulate his administration and “above all, the people of our country”.

Trump doesn’t answer questions or officially concede in bizarre 90-second briefing – video

Despite the surge in coronavirus infections around the world, the Dow Jones rose more than 450 points – around 1.5% – on Tuesday, closing above 30,000 for the first time.

Other major stock markets also rallied. Continuing a surge in recent weeks after large pharmaceutical companies reported promising developments in Covid vaccination trials, the FTSE 100 gained around 1.6%, rising 100 points to end the day at 6,432.

The UK’s main stock index recorded the best week since April earlier this month, after Pfizer / BioNTech said its Covid vaccine was 90% effective in protecting people against transmission of the virus in global trials .

Dow Jones

The UK’s blue chip index remains over 1,000 points lower than at the start of the year, reflecting the scale of the UK Covid recession. In contrast, U.S. equity markets were supported by large gains for U.S. tech companies that profited from the shift to work and shopping online during the pandemic.

Vaccine updates from the University of Oxford and AstraZeneca have extended the rally further this week in hopes of a rapid economic recovery next year. However, the market value of the UK’s largest pharmaceutical company has fallen by more than £ 4 billion since Monday’s announcement, after reporting lower efficacy rates than other major vaccine producers. .

European markets also extended the rally on Tuesday, with the French CAC 40 and German DAX rising more than 1.2% on Tuesday. The price of oil surged amid speculation that a rapid economic recovery could fuel increased demand for energy around the world, with the price of U.S. oil hitting $ 45 a barrel for the first time since March.

What is the FTSE 100?
The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange, measured by their market value or capitalization. The total value of the companies that make up the FTSE 100, often referred to as “blue chip” companies, currently stands at around two trillion pounds; around 80% of the value of all listed companies in the UK. The FTSE 100 was founded in 1984 as a joint venture between the Financial Times and LSE.

What are the advantages of being in the FTSE 100?
London is one of the world’s leading financial centers, and the capital’s main market inclusion status has significant advantages. Benefits for blue chip companies include increased visibility, especially at the international level.

It is still considered by many to be an indicator of the health of companies in Great Britain although in fact the FTSE 250 index is more representative of domestically oriented companies, as around 75% of FTSE 100 company profits come from abroad.

Earning a spot in the FTSE 100 may improve demand for a company’s shares, as some investors are more comfortable investing in blue-chip index companies. It can also help raise capital.

Many funds are linked to the FTSE 100. These low cost passive investments, known as tracking funds or index funds, do not use highly paid fund managers to select stocks, but instead invest in constituents of the main stock index, thus following its performance.

Why would a company be excluded from the FTSE 100?
A drop in the stock price is the main reason a company is demoted from the index because it will reduce its value. Companies are also removed from the index when they have been taken over and no longer have a separate stock exchange listing.

I don’t own any shares – why is the FTSE 100 important to me?
The FTSE 100 affects most people even if they don’t invest directly, as pension funds are often tied to the main market and its performance directly affects returns.

What are the rules according to which companies are promoted and demoted during each quarterly review?

A number of rules are in place to ensure that there is no constant turnover of companies exiting and entering the main index on a quarterly basis.

Any company outside of the FTSE 100 that has a market capitalization equal to or greater than the 90th position in the main market is guaranteed promotion.

Conversely, any company that ranks it 111th or lower is automatically demoted. Depending on the number of companies that automatically meet these criteria at the time of each quarterly review, the main market is “rebalanced” to reflect the total of the top 100 listed companies.

Russ Mold, chief investment officer of Manchester-based stockbroker AJ Bell, said: “Oil is acting as an economic indicator and the commodity has been in tears since last month, increasing more than 20% in value then. as markets begin to become more optimistic about economic activity amid positive vaccine news. ”

The gains come as investors bet that lingering political uncertainty over the U.S. election outcome is gradually dissipating, after the GSA initiated the formal transition of power for Biden to take the presidency in January.

This contrasts sharply with Trump’s claims that a Biden victory would cause a stock market crash. With the hope of a smooth power exchange, a Covid vaccination program and a rapid economic rebound, the benchmark S&P 500 is also on track for its best November since 1980.

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Analysts said there was growing hope that the next administration could tackle the Covid-19 pandemic, spur economic recovery and push through a new stimulus package to jumpstart growth in the region. largest economy in the world. Investors are also congratulated that Janet Yellen, the former head of the US Federal Reserve, is on the verge of becoming the next US Treasury Secretary.

Joshua Mahony, senior market analyst at financial trading firm IG, said: “With improving economic data, an ongoing vaccine and Biden’s push for more stimulus on the horizon, there is has many reasons to be optimistic for the coming month. “


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