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Forex · News · USMarket

NEWS / USMarket

USmarket Data on US economy were positive that supported indexes

11:47 02/22/2006

On a background of a good report of Home Depot Inc, which results surpassed analysts’ forecasts shares on Wall Street opened with growth.  Stock indexes were also supported by Wal-Mart Stores data, which results were better than the forecasts.

So, profit of the world's largest retail dealer Wal-Mart Stores Inc. rose in 4 quarter of the last year on a background of rise in demand for computers and gift certificates.

The net profit made $3.6 billion, or $0.86 per a share against $3.2 billion, or $0.75 per a share the same period of the last year.

Analysts expected the profit at a level $0.83 per a share. Net sales were up 8.6 % to $89.3 billion.

But, in experts’ opinion the company gave weak forecasts for new year, from the market point of view.

And positive data on the index of leading indicators in the USA for January, were considerably above forecasts, also sustained key stock indexes.

Let's remind that the value of the indicator was equal to +1.1 %, at the forecast +0.4 %. And the previous value has been revised from +0.1 % up to +0.3 %.

However the main event became the publication of the US FRS FOMC meeting minutes on January, 31st. We shall remind that as well as the majority of experts assumed the decision on the basic interest rates increase by 0.25 %, made at US FRS FOMC meeting on January, 31st, was taken unanimously.

As the information did not become unexpected and the market’s reaction was not significant.

Let's also notice that in the text of the minutes it was said that the current economic situation was not simple, however, rates of growth of the American economy were high enough.

Besides the minutes noted that to level risks of growth of inflationary pressure the further firming of a FRS monetary policy would most likely to be necessary.

Let's remind that today the federal funds rate makes 4.50 %, and in opinion of some Fed representatives it has not reached a neutral level yet.

Overwhelming majority of experts forecast that following increase of the rate on 0,25 % takes place in March of this year. The publication of the document has only confirmed these forecasts.

It is necessary to notice that despite the general positive tone of the document long-term hawkish increase of a level of interest rates in the USA should not be expected.

It is remarkable that all members of the meeting agreed that the future steps in the context of change of monetary policy would depend on the subsequent economic indicators.

As a result Dow-Jones index of New York stock exchange was down 46.26 points and was closed at a level 11069.06. NASDAQ index was down 19.87 points and is at a level 2262.49. S&P 500 index was down 4.21 points and is at a level 1283.03.

Profitability of the US state obligations for 30 years was up 0.018 in comparison with the previous closing and makes 4.527.

We recommend keeping purchases of Dow-Jones index futures opened from a level 10690. Some correction of the index is not excluded, however its further growth does not raise doubts. However, as in this situation some descending correction of key stock indexes is not excluded, we recommend to protect existing profit by placing the stop on a greater part of the open positions at a level 11122.

The remainder (smaller part) should be kept with protective stops at a level of "make-out" - 10690.

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