Global markets fly as Trump's $1 trillion infrastructure plan puts a 'rocket under stocks' — and the Fed launches $250 billion of fresh stimulus

ReutersTraders work on the floor of the NYSE in New York
  • Global stocks rose on Tuesday on reports that President Donald Trump’s administration is considering fresh stimulus worth $US1 trillion for the US economy.
  • Futures tied to the S&P 500 rose 1.2%, signalling that US stocks will rise for a third consecutive day.
  • US stock futures continued to track the previous day’s gains after the Federal Reserve announced it would begin purchases of up to $US250 billion in individual corporate bonds.
  • In Europe and Asia, stocks also jumped, with Japan’s Nikkei gaining almost 5% by the close, and most major European indexes up more than 2% in morning trade.
  • “The Federal Reserve became an accidental Lone Ranger overnight, riding in to rescue beleaguered financial markets that had circled the wagons over secondary outbreak COVID-19 fears,” Jeffrey Halley, a market analyst at OANDA said.
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Global stocks jumped on Tuesday after the US Federal Reserve declared fresh economic stimulus measures and on reports that the Trump administration may be working on a $US1 trillion infrastructure proposal fund to boost the US economy.

Trump’s proposal aims to set aside funds for infrastructure such as roads and bridges, but part of the funding would also be directed towards 5G wireless infrastructure and rural broadband, according to Bloomberg.

As markets were just beginning to weigh the prospect of another prolonged sell-off amid fears of a second coronavirus wave, talk of a $US1 trillion infrastructure plan has “put a rocket under stocks again,” Russ Mould, investment director at AJ Bell, said.

The central bank said on Monday it would begin buying a “broad and diversified portfolio” of individual corporate bonds of up to $US250 billion to support liquidity and credit for large employers.


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Following the announcement, US stocks erased losses and the Fed became an “accidental Lone Ranger overnight” as it rode in to rescue distressed financial markets that were recently in the red over fears of a second coronavirus wave, Jeffrey Halley, a senior market analyst at OANDA said in a note.

Gains in global stocks continued a dramatic reversal on Monday when indexes recovered from early losses and closed higher.

As the Federal Reserve backstopped corporate credit and supported printing money to lend to companies, an immediate return to business by the “buy everything herd” was seen, Halley said.

In the UK, the benchmark FTSE 100 rose 2.3% even as data released by the Office for National Statistics showed that the jobless claimant count in the UK rose by 528,900 to 2.8 million in May.


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Here’s the market roundup as of 10.20 a.m in London (5.20 a.m. ET):


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