(JULY 31): The US equity market has been on a tear. The Dow Jones Industrial Average and Standard & Poor’s 500 are up 9.9% and 10.7%, respectively, year to date. Similarly, the Nasdaq Composite Index has gained 19.3%. While sentiment had been driven by the new US administration, improving global economic growth is providing the backbone to the rally, says A J Kahling, senior manager of trader education and market strategy at broker age firm TD Ameritrade.

Speaking at The Edge Singapore’s Investment Forum 2017, Kahling says the tightening of US monetary policy is an indication of economic strength. There have been two interest rate hikes so far this year. “Interest rates rise because the economy is doing well,” Kahling told the audience at the Suntec Singapore Convention & Exhibition Centre on July 22.

In its Federal Open Market Committee meeting minutes on July 26, the US Federal Reserve said the US labour market has continued to strengthen and that economic activity has been rising “moderately” so far this year. Job gains have been “solid, on average”, since the beginning of 2017, and the unemployment rate has declined. Still, the US central bank said it decided to maintain the federal funds rate at 1% to 1.25%. “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labour market conditions and a sustained return to 2% inflation.”

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)

Related Stories

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook