The Strategist

US and European indices go up despite turmoil in Washington

01/08/2021 - 03:54

The Dow Jones index reached an all-time high of 31,193.4 points, up more than 2.6% since the unrest began in Washington. On January 6, the NASDAQ Composite index was down 0.6%, but rebounded 2.6% the next day to 13,038.25 points, also posting a new all-time high. On January 7, the leading European stock indexes added 0.3-0.9%, and gained 2.1-4% over the two days.

The ongoing economic recovery amid the coronavirus pandemic is one of the main reasons the market has ignored the civil unrest in Washington. 

"There should be no mystery as to why markets didn't care about what happened yesterday, no matter how disturbing and embarrassing it was. Because it had nothing to do with the economy, earnings or interest rates," Bleakley Advisory Group chief investment officer Peter Peter Boockvar told MarketWatch. 

The rise in markets followed after the US Congress confirmed the election of President Joe Biden. In addition, incumbent President Donald Trump promised an orderly handover of power on 20 January.

Another driver of the rise in stock indices is optimism about the prospect of a new, larger round of financial spending after the Democratic Party won a run-off election in Georgia, which will give the party control of the US Senate. 

"President-elect Joe Biden will be able to push through more aggressive stimulus packages and fund spending through higher taxes," Kathy Lien, managing director of currency strategy at BK Asset Management, told MarketWatch. Investors also remain positive about the expansion of engineered vaccines, despite concerns about new strains of COVID-19.

These factors are also positive for cryptocurrencies. Bitcoin, which rose sharply in the first days of 2021, by the evening of January 7 had passed the mark of $40,000 and reached a new historic high.


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