2016-09-12 16:02:12

At the beginning of this week the American and world stock indices sharply fell due to concerns of the monetary policy tightening in the United States after two- month steady trading during the summer. Due to the lack of volatility in the U.S. stock market last Friday, the US indices fell in the market. The decline in the indices DJIA and S&P500 was the strongest since Brexit.

At the end trades last Friday the Dow Jones Industrial Average fell by 2.1%, the S&P500 - by 2.45%, which is the strongest decline since June 24, (the second day of the sale after the British referendum, when the index fell by 1.8%). The Nasdaq Composite fell by 2.5%.

During the Asian session this Monday, the Japanese index Nikkei fell by 1.7%, the Australian index Australia200 fell by 2.2%.

Last Friday’s comments of the Boston fed President Eric Rosengren have increased concerns about possibility of the interest rate hike by the US Central Bank this year.

Rosengren said last Friday that there are grounds for monetary policy tightening, which will help avoid overheating of the economy. Earlier Rosengren actively supported maintenance of the interest rate at the low level. The yield on 10-year U.S. Treasury bonds has grown up to 1.696% on Monday from 1.671% last Friday, which was the highest level since June.

Thursday’s decision of the ECB to refrain from monetary policy easing has also a negative impact on global stock indices.

According to the data by CME Group, probability of a rate hike at the meeting in September is estimated at 24%, while last Thursday such possibility was estimated at 18%. The USD index WSJ showing the positions of the USD against the basket of 16 currencies, has grown by 0.5%. The prospect of the rate hikes usually leads to the strengthening in the USD. However, the rise in the interest rate will not be sufficient to change the bullish trend of the U.S. stock market. It is likely that the bullish trend is associated with a long-overdue correction after a prolonged flat in the summer. The bullish market decreases during the recession, but may persist at the moderate and gradual increase in interest rate.

At the conference in Jackson Hole in August Janet Yellen said that in the long- term fact of the interest rates increase by a Central Bank means that the country's economy and the companies perform successfully, showing positive dynamics of the US stock market.

This Monday (20:00 GMT+3), Lael Brainard, representative of the US Fed's, who does not support the policy of the rate hikes, will give a speech, after which a ban on public comments before the Fed meeting on September 20-21 will enter into force.

S&P500: strong two-day decline in indices.  Fundamental analysis for 12.09.2016