11.01.202112:59 Forex Analysis & Reviews: US and European stocks showed optimism at the beginning of the year

US stock exchanges exhibited an unprecedented rise on the last day of the first working week of the year 2021. The major stock indexes were able to jump to their record levels, which, of course, surprised analysts and investors a lot. Market participants did not react to the growing political tensions in the country and instead are drawn in the question of increased fiscal stimulus, which is included in the plans of the new administration under President-elect Joe Biden.

All the troubles and instability in the political arena do not have a serious impact on the stock markets. Moreover, many experts argue that it is from a policy point of view that now is the best time for US indicators to strengthen significantly. In particular, the principle of the work of the presidential administration itself will change dramatically. If Donald Trump was characterized by impulsiveness and unpredictability of decision-making, now we should prepare for a stable and balanced policy without surprises and sharp changes in course. In addition, Joe Biden intends to focus on the problems of international cooperation, which will allow stock markets to feel more secure.

Recall that the official transfer of power from the former US leader to the new one should take place very soon – on January 20, 2021. In the run-up to this event, investors are speculating on how the situation in the stock markets will change, and so far nothing catastrophic is expected.

Against the background of the political struggle, the rather negative report on the situation in the labor market of the United States of America, which was presented just on Friday last week, did not make a big impression on market participants. According to official data from the US Department of Labor, the total number of jobs for December 2020 dropped by 140,000. Moreover, this kind of reduction was the first time in the last seven months. Recall that a large-scale drop occurred in April 2020, when the economy immediately lost almost 21,000 jobs. According to preliminary data of analysts, the number of jobs in the country at the end of the year, on the contrary, should have increased by an average of 50,000, but this did not happen. At the same time, the unemployment rate remained at 6.7%, while the preliminary forecast reflected an increase to 6.8%.

For the time being, the negative situation in the labor market does not matter for the participants, since they place the main bet on those incentive measures that have already been signed and should come into force in the coming year. And given the fact that the campaign for large-scale vaccination of the population against coronavirus infection is only gaining momentum, there are even more hopes for the recovery of the economy in general and the labor market in particular. Therefore, all the unpleasant news is perceived as temporary difficulties that will be overcome in the near future.

The Dow Jones Industrial Average index at the end of trading last week immediately increased by 0.18% or 56.84 points, which sent it to 31,097. 97 points.

The S&P 500 index added 0.55% or 29.89 points. Its current level consolidated around 3,824. 68 points.

The NASDAQ Composite Index rose 1.03% or 134.5 points, pushing it into the range of 13,201.68 points.

European stock markets also saw a solid recovery on the last working day of last week, which was supported by a positive trend in the securities of companies in the technology sector.

Against the background of strong statistics from some of the leading companies in the American technology sector, growth was also recorded in European companies over the past quarter, which immediately affected investor sentiment.

In addition, new statistics on the region's economy was published last Friday. In particular, it became known that the volume of industrial production in Germany increased by 0.9% compared to the same period last year. At the same time, the preliminary data of experts turned out to be more modest than the real data.

The unemployment rate in nineteen countries of the region slightly decreased last autumn, thus has moved from 8.4% to 8.3%. This also came as a surprise to experts, who had expected growth of up to 8.5%.

The overall index of large enterprises of the European region STOXX Europe 600 added 0.66%, which moved it to the level of 411.17 points.

The German DAX Index gained 0.58%. France's CAC 40 Index rose 0.65%. Italy's FTSE MIB Index added 0.21%. The UK FTSE 100 Index climbed 0.24%. Spain's IBEX 35 Index went up 0.26%.