Just over a month ago, the Dow Jones index on Wall Street passed the 20,000 mark - a key milestone for the index. The Dow vaulted past the 21,000 point on Wednesday night, reflecting a wider rally on markets in the US and elsewhere, and stayed above that point last night.
Paul Sommerville, of Sommerville Advisory Markets, described that journey of 1,000 points in a month as incredibly fast. "It just goes to show the optimism in the market. The journey from 14,000 to 15,000 took six years. This took 24 days." Mr Sommerville said Mr Trump had a lot to do with the air of optimism on markets with the expectation of higher inflation and higher growth for the US economy since the election. "Participants are trying to price in the growth. The hard data has not shown that growth is coming, but they're guessing it is."
Paul Sommerville pointed out that it was mainly retail investors that were doing the buying in the last month. "Institutional investors have been net sellers," he explained. "That's a worrying sign. The professional investors are trimming their positions. The run-in has been so huge. The Dow has gone up 20% in 4 months and it was already very highly valued before the election."
Mr Sommerville said the founders of Snap, the parent company of Snapchat, couldn't have picked a better time to float their stock on Wall Street. "It was just three years ago that Facebook offered $3 billion for Snap. They sold it at $30 billion yesterday. It just shows the level of optimism."
He pointed out that the company was loss making to the tune of $0.5 billion last year. "If you believe it's going to be like Facebook, then it's good value. If you think it's like Twitter, you'll lose your shirt." Paul Sommerville also compared the Snap floatation to the "Cabbage Patch" doll frenzy of 1983. "We're never going to remember this company. There are better companies to invest in," he concluded.
***
MORNING BRIEFS - Shares of the company behind the loss making social media and photo sharing app, Snapchat, closed 44% higher on Wall Street last night following their stock market debut yesterday. The shares were priced at $17 a piece in their initial offering but as soon as the market opened they soared to $24 and finished the day at $24.50, having gone as high as $26 during the session. That left the company with a valuation of close to $30 billion - two and half times that of Twitter. Investors snapped up the shares despite the absence of accompanying voting rights.
*** Shares in machinery manufacturer Caterpillar fell by almost 5% after US officials raided three of its sites as part of a criminal investigation into tax irregularities. The company is accused of shifting billions of dollars in profits abroad to avoid paying taxes in the US. Among the sites included in the raid was the company's headquarters in Illinois.
*** The services sector posted further robust growth in February, according to the latest measure from Investec Bank Ireland. The pace of expansion in new export business quickened to its fastest since July last indicating that service companies are putting Brexit concerns behind them for the time being at least. Input prices increased sharply with higher staff and fuel costs to blame. The services sector covers areas as diverse as communication, financial and business services, IT and the tourism trade.
