02 October 2013: The Markets Are Ignoring American Budgetary Problems
DAILY MARKET REVIEWS
By Kristina Leonova: Analyst in Portfolio Asset Management Department.
Yesterday's trading session confirmed confidence of participants of the market that the political debate in the USA will soon end and won't render a negative effect on the economy. The American stock markets grew by 0.4-1,2%, the Dollar remained under pressure, and Gold, which wasn't demanded as a traditional safe investment, dropped by $40, to a two month low.
The majority of the European trading platforms carefully bargain in a "green" zone, however this positive can instantly be replaced by sales against events in the USA. Apparently, investors can't estimate the end of the suspension of work of the government of the USA, which is the first time such an event has occured in 17 years. From now on, more than 800 thousand civil servants will be sent on leave, and that will definitely be reflected in the first economy of the world.
Yesterday in Washington, museums and national parks were closed. At 8:00 o’clock in the morning, the police partitioned off (with iron barriers) all avenues to the Lincoln Memorial, state galleries and showrooms announced termination of work "for an unknown period" on their doors, where signs were hung out.
The previous day, the budgetary office of the White house informed the staff of federal departments that all state institutions to the USA pass to an extraordinary mode. 90% of specialists of NASA, nearly 70% of employees of the Ministry of Energy and 50% of civil servants of the Ministry of Defence, were sent on compelled leave. In such workplaces, only the officials were left who's work is recognized as " vital for the country’s safety". However, they will remain unpaid.
In Washington, no forecasts have been done regarding how long there will be a budgetary crisis. Since 1976, US authorities have declared partial termination of work of the federal government 18 times. The shortest of these crises proceeded for only 24 hours, and the longest fell on Bill Clinton's presidency. In the winter of 1996, federal institutions in the USA didn't work for 21 days.
The main event of the day is the speech of the Chairman of European Central Bank, Mario Dragi, with comments regarding the decision on an interest rate. We believe that his speech won't effect the optimism surrounding the Euro, which is gradually approaching the upper bound of a comfortable range for the European Central Bank 1.2750-1.3700.
Copyright: MAYZUS Investment Company Ltd