Last week, American stock indices went up: on Thursday, all three indices, DJIA, D&P500, Nasdaq have reached the record levels within one day. S&P500 closed at the record highs for the ninth time this year, and the DJIA – for the eighth time. Last Friday, the index Nasdaq Composite grew by 4.5 points, gaining 0.2% for the week and reaching the level of 5232.00. Closing price of Nasdaq Composite last Friday has reached the fourth highest level this year.
The index Nasdaq100, which incorporates 100 largest U.S. and international non-financial companies, has been steadily growing for the 8th week in a row. This index incorporates companies of the major industrial sectors, including computer hardware and software, telecommunications, retail / wholesale trade and biotechnology, but does not include securities of the financial and investment companies.
The increase in investors’ risk appetite and in the demand for risky assets was caused by the rise in oil prices, introduction of monetary policy easing by many of the world's Central Banks and continuing reluctance of the US Fed to raise interest rates.
Probability of the rate hike in the United States in September is now estimated at 12%. It seems likely that the rate will be raised by 0.25% in December. Futures for the US Fed interest rate show 42-45% probability of the rate hike in December.
Last week’s weak data on the US retail sales for July, as well as GDP in Q2 and labor productivity confirms investors’ opinion that the US Fed will continue monetary policy easing. This fact may trigger the rise in the stock indices and US government bonds and the decline in the USD. Last Thursday, the yield on 10-year U.S. Treasury has dropped to 1.515% from 1.575%.
Many market participants believe that the stock indices may continue to rise, although they have already reached new historical highs.
This week the minutes of the FOMC meeting (Wednesday 21:00 GMT+3) will be released.
The minutes are extremely important for determining future monetary policy and prospects of a rate hike in the USA, which have a strong impact on the stock market.