Banks lift Wall Street to new record highs

Headed by Bank of America and Citigroup Wall Street was lifted to new record highs yesterday as the stock market rally continues for the  ten consecutive days. Investors picked large-cap companies’ shares on the expectation that central bank stimulus will help the rally further. S&P index has so far in 2013  gained almost 16 % in a rally driven by The Federal Reserve’s  (FED) monetary easing. All Western banks are easing aggressively and money looking for yield ends up in the stock market.

In spite of  some nervousness that the bond-purchase program may be reined in, investors are for now betting that central banks  will be careful not to remove its support to soon to disrupt the economic recovery. Dow Jones was lifted 0,82 % to a new record high of 15 215. Nasdaq, the technology stock index, reached a one year high of 2 462. Western European markets were also strong. In Tokyo stocks surged to a 5-and-half-year high as the Yen continues to fall against other currencies.  USD/Yen trades at 102,15.

The positive sentiment in the US propels the dollar which gained new 50 points against the Euro. Euro/USD trades at 1.2932. British sterling, GBP, is also losing ground. GBP/USD is down from last week’s high 1.5575 to 1.5227. The dollar index, DXY, is steady after reaching an overnight high of 83,687.  Commodity prices, listed in USD, are decreasing steadily. Gold trade at 1425 in Asia recovering 10 dollar from yesterday’s new onslaught.  Oil prices are also under pressure. The fracking technology has made the US sufficient on energy with the biggest crude storages seen in 50 years. This put a strong downward pressure on oil.

Two major US banks have downgraded Chinese GDP growth to 7,6 % for 2013 and 2014 stating that the time for  double digit growth in China has gone. Their original forecast was 8 %. The Chinese government has put 7,5 % as its target. In a separate development  the Chinese Premier, Li Keqiang, said that China has limited room to use government spending and policy stimulus to boost its economy. The statement dashed hopes among some investors that Beijing may take steps to foster growth.

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