World stocks hit a 19-month high on Wednesday, lifted by strong Japanese trade data, stellar European company earnings and expectations that U.S. President Donald Trump will press ahead with a large fiscal spending package.
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The refocus on Trump's policies aimed at reflating the U.S. economy didn't extend as much to bond and currency markets, where U.S. yields only inched up and the dollar fell across the board, particularly against a resurgent British pound.
MSCI's global share index rose 0.3 percent to 434 points , its highest since June 2015, after two of Wall Street's main indices reached fresh peaks overnight.
U.S. futures pointed to a higher open on Wall Street. On Tuesday the S&P 500 and Nasdaq both rose to fresh record highs and the Dow Jones Industrials came within 51 points of the elusive 20,000 mark.
"It's time dust off those Dow 20k hats again, because the Trump rally is well and truly back on," said Neil Wilson, senior market analyst at ETX Capital.
The post-election rally has tempered in recent days as investors focused on the White House's trade protection pronouncements.
Europe's index of 300 leading shares rose 1 percent and Germany's DAX rose 1.4 percent to a fresh 18-month high, while the UK FTSE 100's rise was limited to 0.3 percent by the strong pound.
Spanish bank Santander was among the big gainers in Europe, its 4 percent rise in 2016 net profit giving its share price a similar boost and leading the continent-wide rally in bank stocks.
Japan's Nikkei advanced 1.4 percent, buoyed by data showing the country's exports rose for the first time in 15 months in December, a positive sign for the economy even as talk of U.S. protectionism looms over the outlook.
Trump signed two executive orders on Tuesday to move forward with construction of the Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure.
He also met chief executives of the Big Three U.S. automakers to push for more cars to be built in the United States.
"We are clearly seeing a pro-business administration that is minded to action," ETX Capital's Wilson said.
Global bond yields rose as Trump shifted his focus back to growth initiatives including promising corporate tax breaks to fuel U.S. investment, after focusing on protectionism in his first few days in office.
The 10-year yield inched up to 2.48 percent, recovering from its dip below 2.40 percent earlier in the week, while the two-year yield held firm at 1.23 percent. It was as low as 1.14 percent on Monday.
European yields rose further. Germany's 10-year Bund yield hit a six-week high of 0.38 percent and France's benchmark 10-year yield hit a one-year high of 0.95 percent , with bond prices weighed down by the rally in stocks and new debt supply.
In currencies, the dollar failed to carry on its upward momentum from Tuesday.
Lingering concerns about growing protectionism and the potential negative effects on global trade and growth remained close to the surface. In this environment, the outlook for the Federal Reserve is murky.
"So far this year the tone of U.S. economic data has been adequate but not sufficiently strong to suggest that the Fed need to move away from the cautiously optimistic sentiments expressed by (chair Janet) Yellen last week," Rabobank analysts wrote in a note.
"Since so little is currently known about the detail of Trump's policy we would expect the (Fed) to be reluctant to act at least until the outlook becomes clearer," they added.
The dollar fell 0.5 percent to 113.15 yen, and 0.4 percent against a basket of currencies. The euro was up at $1.0760, shrugging off a surprised fall in German business morale this month.
Sterling rose 0.6 percent to $1.2595, the day after Britain's Supreme Court ruled that the government would need approval from parliament before formally triggering the country's departure from the European Union.
She also announced a White Paper on Brexit, a document sought by many in Parliament that will lay out the leaving policy.
The court decision overall was seen as clearing the way for Prime Minister Theresa May to get on with launching Brexit talks. Sterling has bounced 4 percent over the last week.
Oil prices reversed their overnight gains. Brent futures dipped 0.8 percent to $54.97 per barrel, after rising 0.4 percent overnight.
(Reporting by Jamie McGeever; Editing by Jeremy Gaunt)