Let’s explore the reason for near 0% interest rate by Federal Reserve.
- Fed decided to hold key rates as near 0% to spur the economical growth in US.
- It has been decided to keep these rates at historic low till the economy recover.
- This will boost the financing to corporates as consumer are flushed with liquidity.
- More positive for asset classes like equities and commodities.
- Still market is waiting for $1 trillion package by US government to provide further liquidity.
- Asian markets are trading mix this morning. (8.30 A.M)
- SGX Nifty is in green note this morning. (8:30 A.M.)
Why Dow rallied on Federal Reserve Decision on Thursday?
- Thursday rally is based upon historical decision to keep holding rates near 0% by Federal Reserve. This will provide impetus to the economy at large and support the riskier asset classes like equities. Since liquidity is the mother of rally in the stock markets.
- The decision has come to support the ailing US economy from unemployment and slow GDP growth rate.
- Still investors are awaiting for another major decision by US government to provide $1trillion to further boost the economical activities and spur growth.
- If this package get through liquidity will further in the system that will fuel the growth of stock markets as well.
- Do not short the market as positive news are getting discounted into the system.
- Dow Jones Industrial Average rose by 160.29 points, or 0.61%, close at 26,539.57.
- The S&P 500 surged by 40.00 points, or 1.24%, ends at 3,258.44.
- Nasdaq Composite Index increased by 140.85 points, or 1.35%, close at 10,542.94.
Asian Markets In Morning
|Indices||Current Value||Prev. Close||% Change|
Nifty 50 outlook for the day.
- SGX Nifty is suggesting that Indian Markets will start at around 11250 level. Today strategy is to wait for dip at 11200 level and they buy Nifty future with a target 11300 level and stop loss 11050.
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Author: Akhil Mahajan, M.D. Mutual Fund Advisory, www.mutualfundadvisory.co.in2,537.76