Actions speak louder than words

Global markets were sailing into positive territory during Wednesday’s session, as corporate earnings reignited investors’ optimism in economic growth. The big news of the day came from the US, after a series of executive orders from President Donald Trump increased bullish sentiment on Wall Street.

The Dow Jones Industrial Average crossed the psychologically important 20,000 level for the first time, while the S&P 500 and the Nasdaq Composite traded in record territory. European markets were also in the green as traders took cues from overseas markets and digested fresh earnings reports.

Banks stage a comeback

Like a phoenix from the ashes, European banks have transformed from being one of the most unloved sectors of 2016 to an investor favourite in the New Year. Just a few weeks into 2017, the Stoxx Europe 600 Banks Index has gained 5.4% and is trading around the highest levels in over a year.

And with the earnings season for banks in Europe kicking off this week, the sector faces its first test – will the newfound enthusiasm for the industry stack up to reality? So far it does. As the first major European lender to report on Wednesday, Spanish heavyweight Banco Santander smashed analysts’ expectations, sending shares trading 3.85% higher. The strong result is believed to have come on the back of higher fees and stronger than expected lending income.

This upbeat earnings statement spurred optimism over the forthcoming results for other lenders. Deutsche Bank shares soared on Wednesday following a Reuters report that the German bank is considering spinning off its asset management business through an initial public offering. Shares were up 5.15%.

Other major banks were also posting gains mid-week. HSBC, Barclays and Lloyds were all in positive territory.

Dow reaches all important mark

The Dow Jones Industrial Average hit its psychologically significant threshold of 20,000 during intraday trading on Wednesday, representing a milestone for the blue-chip gauge and highlighting a relatively speedy path higher for the stock market in the wake of Donald Trump’s election win in November.

The equity rally is supported by expectations that Trump will unleash a raft of pro-business polices, including a rollback of regulations, tax cuts and fiscal spending.

Individual movers

Boeing shares were in positive territory after the aircraft maker reported much better than expected earnings in the final quarter of the year. Shares leapt 4.68%.

Automakers also posted gains, adding to gains on Tuesday when Trump told bosses of three Detroit car manufacturers he will work to ease environmental regulations and cut corporate taxes. Shares in General Motors were up 2.68%, and Ford gained 1%.