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Anzo Lim

Dow Jones Hit a New Record High

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Historical data suggests that December, the last trading month of the year, tends to be the best time for US stocks. Last year, due to negative factors such as prospect of Feds interest increase, the market has witnessed some significant downdrafts due to investors panic. As the global economic outlook eventually improves, ICI(The Investment Company Institute) statistics showed stock funds registered over US$8.2 billion of inflow past 2 weeks, curbing the constant outflow since this September. However, the market still faces many uncertainties at the end of the year.  

The Feds market interventions is showing its significant impact on the stock market.Though FOMC, after 3 consecutive rate cuts, has shown signs of holding interest rate unchanged, the market has been revived by the liquidity injection and bond repurchase program of the overnight repo market. Debt of the Fed has increased nearly US$330 billion since early September to US$4.1 trillion.

Liquidity is boosting the bond market, making it easier for companies to borrow cash that can be used for stock repurchases, which helps to increase demand for stocks. In addition, lower US bond yields also make US stocks more attractive. The Fed's bond purchase scheme plays an indispensable role for promoting a relaxed financial environment and supporting asset prices.





Edited by Anzo Lim

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