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Forex · News · USMarket

NEWS / USMarket

USmarket Despite growth of current account deficit in the USA up to record levels key indexes keep rising

11:47 03/15/2006

Under pressure of data about growth of current account deficit in the USA up to record levels, shares on Wall Street opened varied on Tuesday.

Let's remind that current account in 4 quarter of the last year made $224.88 billion, at experts’ forecasts of growth up to $217.80 billion. As a result deficit reached a record 7 % of GDP that shows that the nation consumes more, than makes, borrowing from other countries for superfluous consumption.

We shall also notice that 6 % is considered as the critical level, and growth above this level is fraught with devaluation of the national currency and depreciation of debts of the country owing to loss of confidence.

However investors continue to believe the US economy, as it is obvious that rates of growth of the American economy leave behind rates of economic growth in the basic trading partners.

 

Besides the retail sales in the USA fell -1.3 % m/m in February. We shall remind, that the forecast was -0.6 %, and the previous value +2.3 %.

And the index of retail sales ex-auto in the USA made -0.4 % for February, at the forecast -0.2 %, and the previous value +2.6 %.

Both indicators were two times less than the predicted levels. Thus the first of indicators was at a minimum level for the last six months, and the second one was minimal for last 23 months.

 

On the other hand unexpected support to key indexes was rendered with the statement of a consulting group Medley Global Advisors that the increase in FRS interest rates more than 0.25 % was unlikely.

Let's remind that yesterday the Medley Global Advisors’ report was released, in which it was said about the opportunity that the FOMC would lift the key rate up to 4.75 % from 4.50 %.

Some analysts suppose that till now Fed has not decided what to do further, however they are inclined to assume that the further policy tightening was unlikely.

 

These data have supported expectations of many investors, that the US FRS will not raise the rate so aggressively as it was expected earlier. However investors do not hurry up with opening of new positions as this week a number of the important data, which can clear up a situation with FOMC further steps, will be published.

 

Moreover, stock indexes were supported by inventory data. So, the inventories index in the USA made +0.4 % for January, at the forecast +0.2 %. And the previous value has been revised from +0.7 % up to +0.8 %. As a result the indicator exceeded the forecast, and its previous value was revised upwardly.

Investors’ optimism improved when Goldman Sachs bank informed that its quarter profit hiked.

 

As a result Dow-Jones index of New York stock exchange was up 75.32 points and was closed at a level 11151.34. NASDAQ index was up 28.87 points and is at a level 2295.90. S&P 500 index was up 13.35 points and is at a level of 1297.48.

And the US 30-years state bonds’ yield was down 0.065 in comparison with the previous closing and makes 4.703.

We recommend keeping purchases of Dow Jones index futures. The purposes of growth of the index also hold good.

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