Optimism is returning to the stock markets after Janet Yellen's statements and the ZEW Institute report

On Tuesday, the ZEW Institute released data on economic expectations, which showed the growth after a strong decline since October last year for the second consecutive month. The index for Germany was the strongest. Expectations rose by 6.8 points to 61.8, slightly above market expectations of 60.0. The outlook for the German economy has improved amid rising export expectations and despite the uncertainty caused by tightening social restrictions due to the pandemic. About 71% of surveyed economists expect an improvement in economic activity in the coming months, 9% expect a continuation of the decline in the future, and 20% left their estimates unchanged. The current economic situation remains in the negative zone at -66.4.

Janet Yellen impressed the investors, although everything she said was in line with expectations. The lack of desire to race to reduce the value of the dollar and the need for a huge infusion of stimulus funds into the economy are priorities that the stock market "liked". The S&P 500 returned to its January highs immediately. However, bullish fervor may be subdued. First, the market didn’t hear anything new, and the Republicans will hinder new bills. Secondly, there is no positive sentiment in the credit market. The Treasury yield remained below 1.10%.

Another factor that may deter investors is the lack of a visible desire to extinguish the trade war with China. According to Janet Yellen, China is undermining the position of American companies by erecting trade barriers and providing illegal subsidies to corporations. It also "steals intellectual property and uses methods that provide an unfair technological advantage". The Celestial Empire was called "an important strategic competitor," and all available tools will be used to counter it.

So, not much will change for investors considering the impact of Asian business. Apparently, in this part, the political course remains the same, and in the context of an ongoing pandemic for investors, it means additional uncertainty.

Main market quotes:

S&P 500 (F) 3,802.12 +11.62 (+0.31%)

Dow Jones 30,930.52 +116.26 (+0.38%)

DAX 3,899.80 +84.74 (+0.61%)

FTSE 100 6,720.87 +7.92 (+0.12%)

USD Index 90.412 -0.064 (-0.07%)

by Justforex, 2021.01.20

We advise you to get acquainted with the daily forecasts for the major currency pairs.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Open Account

Get Free Analytics

* required fields