Over three days, leading American indices grew by 2.7–4%

Leading American indices have recently regularly updated historical highs. Over three days, indices rose 2.7-4%, primarily due to the fast-growing technology sector. Russian mutual funds with assets from foreign securities could also benefit from the growth of Western markets. However, even after withdrawing them to separate closed-end funds, almost no transactions are carried out with them.

Leading American indices started the new week by updating historical highs. Immediately after the opening of trading, the S&P 500 index rose to 4867.38 points, which is almost 0.6% higher than the closing value of the previous day. Other American indices, the NASDAQ Composite and Dow Jones, also reached their historical maximums, rising to 15438.4 and 38109.17 points, respectively. Over the past two days, American indices have grown by 2.7–4%.

Stock market bulls reacted positively to strong economic data released last week. On Thursday, the US Department of Labor reported that in the previous week the number of new applications for unemployment benefits fell by 16 thousand, to 187 thousand. Analysts on average expected an increase in the number of applications to 207 thousand, according to data from Trading Economics. “The published statistics indicate that, despite the historically high level of rates, the economic situation remains stable, which gives optimism to the stock market,” notes Oleg Novikov, investment director at Astero Falcon.

According to Arikapital investment strategist Sergei Suverov, the strong position of the American economy is also facilitated by the movement of industrial capacity to the United States from China. According to Sergei Suverov, GDP growth could reach 2.6% over the past year, even despite the high Fed discount rate.

The growth leaders are securities of technology companies. Tsifra Broker analyst Anna Buylakova notes that investors see prospects for the securities of semiconductor manufacturers such as Nvidia and AMD this year amid the growing popularity of AI. Companies in the sector traditionally stand to gain the most from the easing of the Fed’s monetary policy, which may begin as early as the results of the regulator’s March meeting. “Against the backdrop of slowing inflation, the market does not rule out a reduction in the Fed interest rate this year by 1–1.25%,” notes Sergei Suverov.

However, Oleg Novikov draws attention to the current overbought state of American stocks, and therefore does not rule out a decline in quotes during February. But growth may resume in March and continue at least until May. “The dynamics of the stock market in the first half of the year are traditionally strong, especially since there are no reasons for a trend reversal yet,” notes Mr. Novikov.

In the past, Russian indices could benefit from the growth of the US market, in particular through investments in mutual funds focused on foreign assets.

However, after the blocking of NSD accounts in foreign depositories, almost all assets of such funds were blocked. Last fall, the blocked portion of such mutual funds was allocated to special closed mutual funds (see “Kommersant” dated October 17, 2023). However, in the absence of a liquid secondary market, management companies cannot do anything with these assets.

The growing American economy indirectly affects the isolated Russian market, in particular through the dynamics of prices for natural resources. However, as Artem Mayorov, director of the asset management department of Ingosstrakh-Investments Management Company, notes, the key counterparty in the person of China is still experiencing difficulties and is recovering from Covid at a slow pace. “This does not allow us to talk about a significant increase in demand for Russian resources in the foreseeable future, and we do not see significant drivers for rising prices for shares of Russian companies,” the expert notes.

In addition, the high key rate of the Bank of Russia limits the growth potential in the Russian market, as it makes deposits more interesting for investment. “We do not rule out further profit-taking by market participants and a decline in the Moscow Exchange index to the area of ​​3,000 points,” notes Anna Buylakova.

Vitaly Gaidaev