The Dow Jones Industrial Average has topped the 30,000 mark for the first time as financial markets around the world rally amid hopes for a coronavirus vaccine and smooth transition to a Joe Biden presidency.
The landmark for the Wall Street market comes as investors bet rapid medical advances will bring the Covid outbreak to an earlier end than feared, paving the way for a swift economic rebound next year as business activity returns closer to normal and tough government restrictions are relaxed.
The rally also comes after the US General Services Administration (GSA) declared Biden the apparent winner of the US election, clearing the way for the formal transition from Donald Trumpâ€™s administration to begin, ending weeks of uncertainty and delay.
Despite soaring coronavirus infections around the world, the Dow rallied by nearly 500 points â€“ about 1.65% â€“ on Tuesday, soaring past 30,000 fby lunchtime in New York.
Other major stock markets also rallied. Extending a surge in recent weeks after big pharmaceutical companies reported promising developments from Covid vaccination trials, the FTSE 100 gained by about 1.6%, rising by 100 points to end the day at 6,432.
The leading index of UK company shares recorded the best week since April earlier this month, after Pfizer/BioNTech said its Covid vaccine was 90% effective in protecting people from transmission of the virus in global trials.
The UKâ€™s blue-chip index remains more than 1,000 points down from the start of the year, reflecting the scale of the Covid recession in the UK. In contrast, the US stock markets has been buoyed by big gains for US tech firms which have benefited from the shift to online working and shopping during the pandemic.
Vaccine updates from Oxford University and AstraZeneca have further extended the rally this week amid hopes of a swift economic recovery next year. However, the stock market value of the UKâ€™s biggest pharmaceutical firm have dropped by more than Â£4bn since the announcement on Monday, after reporting lower efficacy rates than other major vaccine producers.
European markets also extended the rally on Tuesday, with Franceâ€™s CAC 40 and Germanyâ€™s DAX up by more than 1.2% on Tuesday. The price of oil jumped amid speculation that a swift economic recovery could fuel increased energy demand around the globe, with the US oil price hitting $45 per barrel for the first time since March.
Russ Mould, investment director at the Manchester-based stockbroker AJ Bell, said: â€œOil acts as an economic bellwether and the commodity has been on a tear for the past month, rising by more than 20% in value as markets start to become more optimistic about economic activity amid positive vaccine news.â€
The gains come as investors bet that the lingering political uncertainty from the US election result is gradually lifting, after the GSA kickstarted the formal transition of power for Biden to take over as president in January.
It comes in stark contrast to claims made by Trump that a Biden victory would cause a stock market crash. With hopes of a smooth exchange of power, Covid vaccination programme and swift economic rebound, the benchmark S&P 500 is also on course for its best November since 1980.
Analysts said there were rising hopes that the next administration could get to grips with the Covid-19 pandemic, drive the economic recovery, and push through a new stimulus package to reboot growth in the worldâ€™s largest economy. Investors are also cheered that Janet Yellen, the former head of the US Federal Reserve, is in line to become the next US Treasury secretary.
Joshua Mahony, senior market analyst at the financial trading firm IG, said: â€œWith the economic data improving, a vaccine on the way, and Biden-led push for more stimulus on the horizon, there are plenty of reasons to be optimistic for the months ahead.â€