The advances came after the Dow and S&P 500 hit fresh records in NY while the tech-rich Nasdaq closed above 5,000 for the first time this year.
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The benchmark closed at a record 2,137.16, overtaking the previous high of 2,130.82 hit on May 21, 2015.
Germany issued a 10-year bond at a negative interest rate for the first time as fears about Brexit and economic worries cause investors to rush to the safety of German debt.
The inflation forecast was also downgraded to a rise of 0.4%, versus an earlier projection for 1.2%. The U.S. currency “will likely remain directionless for now, and would find it hard to go upside unless there are fresh, encouraging incentives”, she said. “It is inconceivable that US shares will crumble when real interest rates are negative”, said Hisashi Iwama, senior portfolio manager at DIAM. Etsuro Honda, another top adviser, said now is the time for a double dose of support, saying in an interview that Japan can not cope with deflation with the yen around 100 per dollar – as it is. Analysts predict second-quarter profits will drop 5.7 per cent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.
“The rally is supported not so much by economic fundamentals as liquidity”.
“Globally we are seeing an environment where investors are buying riskier assets and that is putting the yen under pressure” said Petr Krpata, currency strategist at ING.
With the Prime Minister Shinzo Abe being victorious in the upper house elections, he has not secured a political majority in order to push through coordinated monetary and fiscal measures, said Commerzbank.
His meeting on Tuesday with the former US Federal Reserve chair Ben Bernanke, a proponent of “helicopter money” policies – printing money and directly handing it to the private sector to stimulate the economy – fuelled speculation Abe’s stimulus could be funded by the Bank of Japan’s easing.
The government also plans to promote the development of export-related infrastructure to meet its target of raising the country’s annual exports of agriculture, forestry and fishery products, and food items to one trillion yen as early as possible.
The dollar index, which tracks the greenback against six major peers, was down 0.10 per cent at 96.479 in late trading.
The pound rose to $1.3302 from $1.3249 in U.S. trade.
Still, market players say huge uncertainty remains, including May’s approach to negotiating Britain’s exit from the European Union and on whether she will call a general election to cement her authority.
The Bank of England made its first post-Brexit rates decision today and has chose to hold rates unchanged, despite the fact that the majority of economists surveyed by Bloomberg expected a cut.
In other currency pair, the euro EURUSD, +0.0633% was nearly unchanged at $1.1066. Chinese mainland markets also traded in positive territory, with the Shanghai composite up 0.29 percent and the Shenzhen composite higher by 0.34 percent. The pen-European Stoxx Europe 600 index gained 1.1 percent.
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Oil markets failed to catch a bid on the broad improvement in risk sentiment, however, with their prices falling more than 1 percent to two-month lows on Monday. At the same time, the U.S.department of the treasury releases the monthly budget statement.
