Market update: On an all-time high – Dow Jones flies to new record close

Optimism about the economy, the continued support of the US Federal Reserve, and the backdrop of upbeat corporate results propelled the Dow Jones to a new record closing high yesterday, rising 0.9% to finish at 14,253.77. Similarly, the S&P 500 Index (+1.0%) is now at a five-year high and only a few percentage points away from its all-time intraday high of 1,576.09. A stronger than expected reading of US service sector activity from the Institute of Supply Management provided the latest piece of evidence that US growth is accelerating: the non-manufacturing index expanded for the 38th consecutive month, rising to 56.0 (expanding) in February. Overseas, a pledge by the Chinese to increase their fiscal deficit to ensure a 7.5% growth rate has provided yet another tailwind for equities.
 
UK and European markets are riding the wave of positive sentiment this morning. The FTSE 100 is moving higher (+0.3%) after reaching a five-year high yesterday, when it was helped by a strong reading from the Markit/CIPS service sector purchasing managers index (PMI) for February, which climbed to 51.8. On the Continent, euro area PMIs were also not as bad as feared, with strength in Germany providing some reassurance, despite weakness in France, Spain, and Italy. The FTSE Eurofirst 300 has risen 0.3% at the time of writing, to surpass its 2011 peak.