STOCK MARKETS AT ALL TIME HIGH | DOW HITS 30K! WHATS NEXT?
Who would have thought that with everything going on in the world the Dow Jones would break the 30k barrier for the first time in history.\n\nI believe there are 3 major reasons why we are hitting all time highs at the moment:\n\n1. TINA – There Is No Alternative\nThe main issue is that the interest rates are historically low. Even lower than the inflation. Which means that putting your money in the bank basically means you are losing money. So the question is: what is the alternative? And buying stocks seems to be the answer everyone is going for.\n\n2. Government stimulation\nGovernments are putting trillions of dollars into the economy and the stock market hoping to avoid a big recession like what happened in 2008. With the US election splitting power (president, house and senate) it is likely that the stimulation will start going down early next year. \nWill this impact the stock market?\n\n3. Promising results of vaccine tests\nWith the first results of tests of vaccines being positive, we feel like there is light at the end of the tunnel and hopefully we will be able to start picking up sort of our normal life again, pushing money back into the economy.\nThis has caused a shift from tech stocks towards ‘value stocks’ and more traditional companies.\n\nAll in all I believe there is a lot of potential left in the market as long as there is no alternative and the governments keep pushing. But one may wonder, haven’t we gone up too fast?\nOnly time will tell
Euro hits two-month low
The euro sank to its lowest levels in the past two months after the ECB announced that interest rates will remain “at the current level or lower”.
Initially, the common European currency rose as the ECB kept its key benchmark rate unchanged at minus 0.40%.
The euro then plunged and fell to a two-month low, sagging 0.3% on the day and approaching a two-year low reached in May..
Investors interpreted the ECB’s message that interest rate cuts will occur in September along with other stimulus measures as the central bank seeks to lift low inflation and accelerate economic growth..
Euro declined for five days in a row and lost 2.2% in total against the dollar.
The Deutsche Bank Index showed that investors are building up stocks of options in euros and dollars, increasing the number of options to the highest since the beginning of 2018, indicating that some market participants believe in the growth of the euro.
The Swiss franc, supported by expectations for lower rates in the eurozone, soared to a two-year high of 1.0963 against the single European currency. Franc’s rise has reinforced expectations that the Swiss will intervene to weaken the currency and protect their export-dependent economy.
Sebastian Gali, macro strategist at Nordea Asset Management, said he expects the Swiss National Bank and Danish central banks to cut rates in September, and saw «good chance that SNB will already react to today’s ECB meeting».