American stock indices updated all-time highs - 8.1.2021

The US dollar index rose on Thursday. Investors reacted positively to the Democrats' victory in the US Senate elections in Georgia. They believe that it will now be easier for US President Joe Biden to raise corporate taxes. This will increase state budget revenues. The greenback is supported by the continuing rise in the yield on 10-year US government bonds. Today it has grown to 1.1% per annum from 0.9% at the beginning of 2021. Yesterday's economic data on the week’s unemployment decline became an additional positive for the American currency. Retail sales unexpectedly collapsed in November in the Eurozone. This contributed to the weakening of the euro. The yen also showed a noticeable weakening. Prime Minister Yoshihide Suga has announced a lockdown in Tokyo and its neighboring prefectures until February 7.

On Thursday, American stock indices rose and hit all-time highs. Investors expect an increase in economic stimulus after the Democratic party won the Senate election. The problem of raising taxes is not yet taken into account, since this may not be so soon. Loretta Mester, the head of the Federal Reserve Bank of Cleveland, said she didn't expect an increase in the fiscal burden from the new president's administration. The main positive factor for the stock market yesterday was the statement of the Fed officials that the US regulator would continue the quantitative easing program until the end of this year, at least. The volume of the buyback will still be $120 billion per month. Recall that at the end of next week corporate reports for the 4th quarter of 2020 will be published in the United States. Today, economic data on the labor market (Non Farm Payrolls) for December and wholesale stocks for November will be published in the United States and Canada.

World oil prices are on a rise today for the 4th day in a row. They have already peaked in 11 months. The reasons for this are still the same: the worsening of the situation in the Persian Gulf, cuts in oil production in Saudi Arabia and, due to this, OPEC+ in general, as well as a drop in US oil reserves over the week. UBS Bank projects Brent price rise to $60 per barrel by mid-year. In our opinion, the rapid growth of oil prices may temporarily halt amid a noticeable increase in the number of coronavirus cases in China, Japan and Australia and the risks of stricter lockdowns around the world.