16 October 2013: Fitch Placed The Credit Rating Of The US On Revision
DAILY MARKET REVIEWS
By Kristina Leonova: Analyst in Portfolio Asset Management Department.
Each new trading day in the market within the last 2 weeks has begun with the hopes that the budgetary problems in the USA will be resolved, and congressmen will be able to agree upon insoluble questions. Congressmen, during their pre-conference time, manipulate on information that the prospect of the settlement of the current situation is very positive, and a necessary agreement will be reached shortly.
Again we are starting the new trading day with information that congress again, are having problems. The same goes for yesterday, when we were informed that the House of Representatives in the congress of the US postponed the vote regarding the last plan of the republicans. Additionally, the international rating agency 'Fitch Ratings' informed that it has placed a long-term rating of the default of the issuer of the USA in foreign and national currency "AAA" (the forecast being'negative') upon revision.
As a result, the american market reacted with a decrease after a few positive trading sessions. Asian stock markets are also falling this morning. The Dow Jones finished the trading session with a decrease of 0.87% traded on 15168.01 points, Nasdaq bargained next to the level of 3794.01 points having lost 0.56%, S&P 500 decreased by 0.71% reaching the level of 1698.06 points.
There is also a positive factor in all of this budgetary confusion - yesterday's news only convinced us more that the chances of the QE3 turning in the current year is practically impossible. According to Moody's rating agency, temporary dissolution of the government already reduced gross domestic product of the US by 20 billion Dollars. Business activity in the region of New York also falls in connection with low business trust: the Empire State index rolled down to 1.52 from 6.29, having noted a minimum level for the last five months.
Against all these events and, of course, inaction of the American government, the Dollar again couldn't strengthen its positions, and by the evening lost everything that it managed to gain throughout the day. EUR/USD currency pair has a big chance to return to the area of 1.36.
Copyright: MAYZUS Investment Company Ltd