Federal Reserve holds near 0% key rates, as expected.

federal reserve

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.)

wall street

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.

US Markets 

 

  • 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

IndicesCurrent ValuePrev. Close% Change
Nikkei 225 22,408.2922397.11  0.05%
Straits Times 2,537.762573.45  -1.39%
Hang Seng  25,150.0124883.14  1.07%
Taiwan Weighted 12,651.1312540.97  0.88%
Kospi 2,271.152263.16  0.35%
Jakarta Composite 5,109.945111.11 -0.02%
Shanghai Composite 3,297.413294.55 0.09%
SGX Nifty 11,246.0011225.00 0.19%
Time of data collection: 8.30A.M

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. 
Learn Technical Analysis: Click Here
 

 

Author: Akhil Mahajan, M.D. Mutual Fund Advisory, www.mutualfundadvisory.co.in2,537.76

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