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US stocks pushed further into record territory on Tuesday as investors bet on 2024 interest rate cuts, while the yen slid after the Bank of Japan maintained its ultra-loose monetary policy.
The Dow finished at a fifth straight record, piling on another 0.7 percent amid bullish investor sentiment and optimism about easing US monetary policy.
"It looks like we are getting the year-end rally that we were hoping for," said Jack Ablin, chief investment officer for Cresset Asset Management.
US and European stock markets have rallied in recent weeks to set record highs on rising expectations that central banks will begin next year to cut interest rates that they had hiked to stifle inflation.
While US Federal Reserve officials on Monday tried to temper predictions about the sharpness of a pivot in monetary policy, US bond yields slid indicating market expectations that rates will fall.
European stocks ended the day in positive territory as European bond yields also fell, while Asian stocks were mostly higher.
- Bank of Japan -
The Tokyo stock market closed up more than one percent and the yen sank against the dollar after the Bank of Japan (BoJ) opted to stand pat on monetary policy, as expected, and provided no guidance on its plans for the new year.
Speculation had been swirling in recent days that the BoJ was close to shifting away from its long-running, ultra-loose monetary policy as inflation picks up in Japan.
Elsewhere on Tuesday, oil prices added to Monday's rally on companies suspending transit via the Red Sea following attacks on cargo ships by Yemen's Iran-backed Huthi rebels in acts of solidarity with Gaza.
"While in the short term, any price shock is likely to be temporary, if the situation becomes a more permanent state of affairs, or escalates, we could see prices continue to move higher," said CMC Markets analyst Michael Hewson.
The rebels have escalated attacks on tankers and other vessels, imperiling a transit route that, according to the International Chamber of Shipping, carries up to 12 percent of global trade.
In corporate news, Nippon Steel lost almost three percent in Tokyo after saying Monday it would buy US Steel for $14.1 billion, creating the world's second-largest steel company.
Back in New York, US Steel fell 2.5 percent after three Republican senators, including Ohio's JD Vance, urged the rejection of the Nippon deal saying domestic steel production is "vital to US national security."
The letter, jointly signed by Marco Rubio of Florida and Josh Hawley of Missouri, urged the Committee on Foreign Investment in the United states to block the deal. Shares of US Steel had rocketed 26 percent higher on Monday following the agreement.
- Key figures around 2130 GMT -
New York - Dow: UP 0.7 percent at 37,557.92 (close)
New York - S&P 500: UP 0.6 percent at 4,768.37 (close)
New York - Nasdaq: UP 0.7 percent at 15,003.22 (close)
London - FTSE 100: UP 0.3 percent at 7,638.03 (close)
Paris - CAC 40: UP 0.1 percent at 7,574.67 (close)
Frankfurt - DAX: UP 0.6 percent at 16,744.41 (close)
EURO STOXX 50: UP 0.3 percent at 4,535.40 (close)
Tokyo - Nikkei 225: UP 1.4 percent at 33,219.39 (close)
Hong Kong - Hang Seng Index: DOWN 0.8 percent at 16,505.00 (close)
Shanghai - Composite: UP 0.1 percent at 2,932.39 (close)
Dollar/yen: UP at 143.89 yen from 142.78 yen on Monday
Euro/dollar: UP at $1.0979 from $1.0924
Pound/dollar: UP at $1.2727 from $1.2648
Euro/pound: DOWN at 86.25 pence from 86.36 pence
West Texas Intermediate: UP 1.3 percent at $73.44 per barrel
Brent North Sea crude: UP 1.6 percent at $79.23 per barrel
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H.M.Hernandez--TFWP