While you were sleeping: UPDATED Dow climbs 298pts as Wall St rally continues

Wall Street has hit new highs as optimism about the outlook for the US economy and corporate profits gains traction.

At the close, the Dow Jones Industrial Average rocketed 297.84 points, or 1.55% to 19,549.62, the biggest one-day rise since Donald Trump was elected to the White House.

"Things were already improving before the election," UBS Wealth Management Americas chief equity strategist Jeremy Zirin told the Wall Street Journal.

"What's happened since is that many of the pro-growth trends have been exacerbated."

 The Nasdaq Composite Index gained 1.1% to 5393.76 while Standard & Poor's 500 Index surged 1.3%, also to a new high.

The Dow's rise was led by banks and industrial companies. Home Depot and American Express both trading 1.9% higher.

Bucking the trend were shares of Pfizer, Johnson & Johnson and Merck. They were down 2.5%, 2% and 1.6% respectively after US president-elect Donald Trump told Time magazine he planned to lower the cost of prescription drugs. Time named Mr Trump as its Person of the Year for 2016.

"I think it is a new fact of life, that fundamentals can be swept aside any day by comments from the [president-elect]," David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management, told Reuters.

Oil drops below $US50
Oil prices fell 2.3% to $US49.77 for January delivery amid concern US shale producers might raise output next year, while Opec agreed to reduce production.

"It's going to be a cat and mouse game between Opec and shale oil in America," Glencore chief executive Ivan Glasenberg said, according to Reuters.

"Opec members will say, 'if you [raise output], we are going to ramp up production and push oil back down to $35'," Mr Glasenberg said. "I hope shale in America will be responsible and realise what's happened and allow the higher oil price to be sustained."

US government bonds got a reprieve from their post-election selloff, with the yield on the 10-year Treasury note falling to 2.347% from 2.394% in the previous session.

In Europe, the Stoxx 600 Index ended the day with a 0.9% gain from the previous close. France's CAC 40 Index advanced 1.4%, the UK's FTSE 100 Index rallied 1.8%, while Germany's DAX Index jumped 2%.

Underpinning the rally were bets the European Central Bank will announce an extension of its asset purchase programme at the end of a policy meeting on Thursday.

In Europe, cheaper valuations add to the appeal for some.

"Though we're not raging bulls on Europe, it's a region we now strongly prefer over the US," Societe Generale's private banking unit head of investment strategy Alan Mudie said, Bloomberg reported.

"It's not just because of valuations, it's also the fact that Europe is more geared to the improving global economy. That was a curse this year but will be a big benefit in 2017."

(BusinessDesk)