US Stocks rally to new record highs

The US equity market finished session at new record highs on Thursday, 16 January 2020, adding to the modest gains posted in the previous session, as risk appetite buying picked up after an initial U.S.-China trade deal was sealed on Wednesday and Senate approval of a new trade deal between the U.S., Mexico and Canada on Thursday. Meanwhile, momentum further supported by better than expected U.S. retail sales and jobless claims data. At closing bell, the Dow Jones Industrial Average gained 267.42 points, or 0.92%, to 29,297.64, while the S&P 500 index advanced 27.52 points, or 0.84%, to 3,316.81 and the Nasdaq Composite index added 98.44 points, or 1.06%, to 9,357.13.

The markets continued to benefit from recent upward momentum following the official signing of the U.S.-China phase one trade deal on Wednesday. The U.S. President Donald Trump and China's chief negotiator, Liu He, signed the Phase 1 deal before a group of corporate executives and reporters at the White House, marking a truce in the dispute over import tariff which has unsettled markets world-wide and slowed economic growth. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.

The text of the deal includes promises by the Chinese to increase their purchases of U.S. agricultural, manufacturing, and energy products, along with purchases of services, by more than $200 billion over the next two years, though it also states that the parties acknowledge that purchases will be made at market prices based on commercial considerations. It also includes commitments by the Chinese to enforce intellectual property theft laws and a bilateral evaluation and dispute resolution arrangement that will encourage the U.S. and China to work jointly to resolves allegations of patent and copyright infringement or intellectual property theft. In exchange, the U.S. slashes tariffs on $120 billion in Chinese goods to 7.5% from 15%.

Also, the U.S. Senate overwhelmingly approved the U.S.-Mexico-Canada Agreement on Thursday, sending the pact to President Donald Trump for signature just a day after he inked a high-profile trade deal with China.

A batch of largely upbeat U.S. economic data also contributed to the buying interest, with a report from the Labor Department showing an unexpected decrease in initial jobless claims in the week ended January 11th. The Labor Department said initial jobless claims fell to 204,000, a decrease of 10,000 from the previous week's unrevised level of 214,000.

The Commerce Department also released a report showing U.S. retail sales rose by 0.3% in December, matching the upwardly revised increase in November. Excluding auto sales, retail sales increased by 0.7% in December after coming in unchanged in November.

The Philadelphia Federal Reserve also released a report showing a substantial acceleration in the pace of growth in regional manufacturing activity in the month of January.

CURRENCY NEWS: The U.S. dollar declined 0.1%, relative to a basket of its peers.

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