US stocks, dollar gain as investors await Trump message

Trump's call for tax cuts and more infrastructure spending have boosted US shares and the dollar

Wall Street shares and the US dollar rose on Wednesday ahead of a news conference by US President-elect Donald Trump in which he is expected to provide more details about his plans for the world's largest economy.

Trump's campaign calls for tax cuts and more infrastructure spending have boosted US shares and the dollar, as well as driving a selloff in Treasuries, but his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions.

"The hope is for a pivot back toward the Trumponomics agenda, which was three key themes: tax reform, deregulation, and infrastructure spending," said Vassili Serebriakov, a currency strategist at Credit Agricole in New York.

The Dow Jones industrial average rose 0.4 per cent, to 19,933.84, while the S&P 500 is up 4.1 points, or 0.180704 per cent, to 2,273 and the Nasdaq Composite is adding 6.98 points, or 0.13 per cent, to 5,558.80.

Other global stock indexes rallied as well.

The UK's FTSE 100 was poised for a record twelfth straight day of gains while European shares rose 0.2 per cent.

The US dollar, meanwhile, rose to a one-week high against a basket of major currencies, up 0.9 per cent to 102.87. It also gained against the yen, rising 0.8 per cent to 116.75.

Trump has vowed to label China a currency manipulator on his first day in office on January 20 and has threatened to slap huge tariffs on imports from China.

US House of Representatives Speaker Paul Ryan and top members of Trump's transition team are discussing a controversial plan to tax imports.

Economists have warned that protectionist measures could stifle international trade and hurt global growth.

"From a currency perspective, markets will aim to get a clearer picture of trade, fiscal stimulus and the new administration's relationship to the Fed," Morgan Stanley strategists wrote in a note to clients.

The dollar has gained broadly since Trump's election in November as investors bet he would boost public spending and spur repatriation of overseas funds by US companies as well as higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about trade and relations with China.

Bank of America-Merrill Lynch strategists warned on Wednesday that a worrying consensus has developed in financial markets with analysts and investors overwhelmingly bearish on bonds and positive on developed market stocks, financials and the US dollar.

Sterling meanwhile edged towards a 10-week low against the dollar on Wednesday, kept under pressure by fears that Britain will undergo a "hard" exit from the EU in which access to the single market will play second fiddle to immigration controls.

In the bond market, US Treasury yields were flat, with the 10-year at 2.386 per cent.

An auction of German debt was expected to go down well with investors looking for safe havens. German 10-year yields rose to 0.254 per cent. Portuguese yields held near 11-month highs as the country prepared for its toughest bond sale in years.

In commodity markets, oil rose, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers.

Brent crude was last up $1.07, or 1.99 per cent, at $54.71 a barrel. US crude, on the other hand climbed 1.79 per cent, to $51.73 per barrel.