2016-11-11 12:14:21

Following sharp decline after the announcement of the first results of the presidential elections in the United States on Wednesday 9 November, the US stock market has changed movement direction. Stock assets fell to the lowest level in the few past months; however, at the beginning of the European trading session stock assets have regained half of the losses.

Yesterday, for the second day in a row, shares of the major US banks and industrial companies have been in high demand. In the result index of Dow Jones Industrial Average closed at record highs near the level of 18808. The Dow Jones Industrial Average rose yesterday by 1.2%, exceeding previous closing level record of 18636, which was reached on August 15. This week the index has grown by over 5%.

Movement in the other major U.S. stock indexes was mixed. The index Nasdaq Composite has been declining for the second day in a row. On Thursday, the index fell by 0.8% as stocks of the technology sector were declining. This week, the index S&P500 has grown by 4% and reached 2183.0, which is close to the annual highs at the level of 2192.0. Today, the index S&P500 has slightly gone up in the early European session, and is traded at the level of 2170.0.

Yesterday, the yield on 10-year US government bonds increased to 2.113% from the Wednesday’s level of 2.070% exceeding the level of 2% for the first time in nine months.

Trump calls for the tax cuts, immigration restrictions and protectionist policy in trade. American investors expect that additional fiscal stimulus and higher interest rate will be soon introduced.

Economists expect the UD Fed will raise interest rates twice next year. The American economy is steadily recovering. However, the increase in the interest rate will be insufficient for changing the bullish trend of the US market. It is likely that the markets will stabilize in advance of the US Fed meeting in December.

Although the latest NFPR data was below the forecast (the number of jobs in October has increased by 161 000 against the forecast of +173 000 and 191 000 in September; unemployment rate fell to 4.9% against 5.0% in September, which was expected), the labor data is still positive and along with the positive GDP it may persuade the US fed to raise the rate in December.
When the markets will finally calm down after the election, American macro-economic statistics will gain priority in the market movement again. Note that the latest statistics are positive and it will provide a strong support to the USD and the US stock market.

S&P500