(Bloomberg) — Europe’s stock benchmark was on track for a record high and US equity futures gained as optimism over more artificial intelligence spending under Donald Trump offset uncertainties over looming tariffs.
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The Stoxx Europe 600 climbed 0.7% Wednesday, surpassing September’s record close, paced by industrial and technology shares. Futures on the S&P 500 and Nasdaq 100 signaled that the strong Wall Street rally of the past two sessions remains on track. SoftBank Group’s shares rose more than 10% after Trump named the company as a partner in a venture to build data centers and infrastructure in the US.
A gauge of the dollar traded near its lowest in a month, signalling relief that the president has held back from slapping harsher penalties on trade partners at the outset of his tenure. Betting on the greenback had become one of Wall Street’s favored trades in anticipation of a trade war would sap global growth and potentially cause the Federal Reserve to refrain from interest-rate cuts this year.
Instead, Trump’s first two days in office have largely been supportive of sentiment, as investors zero in on his pro-business policies. A catch-up trade is building for stock market laggards if the president pursues a less protectionist approach, according to Bank of America Corp.’s monthly survey of fund managers.
“There was just relief that as of day one, we didn’t get the tariffs that were expected,” said Corinne Lord, a senior investment specialist at St James Place Management. “The question is to what extent we will get them compared to what he’s promised. There is still a lot of nervousness about what might lie ahead.”
Trump on Monday said he would likely enact tariffs of as much as 25% on Mexico and Canada by Feb. 1, but stopped short of signaling similar action for China and the European Union.
Even so, few investors are straying from tech stalwarts notching new highs for the S&P 500, with bullish bets on Magnificent 7 stocks ranked as the most crowded trade in BofA’s survey. That was followed by the US dollar and cryptocurrencies.
The Big Tech long trade got more vindication Wednesday as Netflix Inc. surged as much as 15% in the premarket on fourth-quarter results that beat estimates. If premarket gains carry through the day, Netflix will hit an all-time high and be set for its biggest rise since October 2023.
