The key event of the week finally took place. It has already been said that once the results of the FOMC meeting are known, we have to wait at least a day for the markets to digest the information. In the first 24 hours after such a major event, markets are often emotional. Emotional trading is always illogical. That's what happened with US stock indices. On the day of the FOMC meeting report, they were rising for some reason, although monetary tightening is a bearish factor for them. However, the NASDAQ and the S&P500 indices plummeted yesterday. The S&P500 also reached its all-time high. Therefore, in spite of Thursday's decline, the upward trend is still present in all three major indices, including the Dow Jones. This suggests that investors are still paying more attention to inflation in the US, which is already at almost 7%. Accordingly, with inflation so high, investors are not interested in low-yield and low-risk assets like deposits and bonds. Consequently, there is still demand for shares. Cryptocurrencies, on the other hand, have been falling for more than a month. Therefore, only the US stock market is out of the picture so far. However, we believe its decline is not far off either. If the Fed completely abandons the QE program in the next three months and starts to raise rates, this will create pressure on equities and indices. Thus, demand for them will have to fall, which will lead to a decline in their exchange rate.
Meanwhile, in the US a large number of macroeconomic publications were released yesterday. The ISM Services Index fell from 58.0 to 57.5 points. The ISM Manufacturing PMI dropped from 58.3 to 57.8 points. Although both indices declined slightly at the end of November, the drop is too small to indicate any negative trend. Notably, any figure above 50.0 is regarded as bullish. Industrial production rose by 0.5% against a forecast of 0.6%. Formally, the report was only 0.1% weaker than expected. Jobless claims for another week stood at 206,000 and remain at their lowest level in years. The number of building permits rose by 3.6% in November. It was expected to fall by 1.3%. Housing starts in the US rose by 11.8% on a monthly basis in November. It was expected to rise by 2.6%. The Fed of Philadelphia manufacturing index was much weaker than expected. It was only 15.4. Thus, macroeconomic statistics could hardly be the reason for the decline in stock indices on Thursday.
