Volatility in financial markets declines ahead of the release of US inflation data

US stock indices mainly decreased on Monday. At the close of the stock exchange, the Dow Jones (US30) remained at the same level, the S&P500 (US500) fell by 0.37%, and the NASDAQ (US100) tech index lost 0.58%.

Tom Lee, the founder of the research company Fundstrat, believes that the US stock market will experience a rapid rally in February amid market sensitivity after the collapse. The expert predicts that by the end of the first half of 2022, the S&P500 (US500) may jump above 4850 points, which is 8% above current levels.

This week, investors' attention is focused on US consumer price data for January, released on Thursday. Forecasts show that markets expect another rise in inflation, which could be a strong argument for the Fed to tighten monetary policy more quickly. This mainly concerns the 0.5% interest rate hike at the March meeting.

The corporate reporting season is coming to an end. About 75% of S&P500 index companies have already reported for the previous quarter, and their profits on average exceeded market forecasts by 8%. But many companies failed to meet investors' expectations. This week, Pfizer, KKR, Uber, Walt Disney, Coca-Cola, PepsiCo, and Twitter will have their quarterly reports.

This week, a delegation of senior US officials, including representatives from the Treasury Department, the State Department, and the Commerce Department, will visit European countries (United Kingdom, France, Belgium, and Germany). They will discuss the coordination of possible sanctions and export controls that the US and its allies might impose in the event of a Russian invasion of Ukraine.

European stock indices mostly rose yesterday. German DAX (DE30) gained 0.71%, French CAC 40 (FR40) jumped by 0.83%, British FTSE 100 (UK100) added 0.76%, but Spanish IBEX 35 (ES35) decreased by 0.36%.

During a visit to Washington, German Chancellor Olaf Scholz told reporters that by 2045 Germany plans to go completely CO2 emission-free. As part of the strategy to fight climate change, Germany has decided in a short period of 25 years to completely abandon the use of oil, coal, and gas. According to the chancellor, new decisions will be made as early as this year to expand wind energy, solar power plants, and developments in the field of hydrogen energy.

Crude oil prices fell for the first time in seven sessions after reports of a high possibility of a US-Iran nuclear deal following talks that dragged on for more than a year. "WTI crude oil could fall as low as $82-$85 a barrel if we continue to get positive headlines about talks with Iran," said John Kilduff, a partner at New York-based energy hedge fund Again Capital.

Asian markets don't show a single dynamic on Tuesday. Japan's Nikkei 225 (JP225) added 0.13%, Australia's S&P/ASX 200 (AU200) increased by 1.07%, and Hong Kong's Hang Seng (HK50) decreased by 0.73% today.

Trading of Chinese biotechnology company Wuxi Biologics (Cayman) Inc. was suspended in Hong Kong after a sharp drop of 32% due to the US authorities adding the company to the "suspicious list."

Former Reserve Bank of Australia Governor John Edwards said the Reserve Bank of Australia (RBA) could raise its key rate four times in 2022, given the economy's current upward trajectory. He also noted that the RBA is likely to make the first rate hike in August.

Main market quotes:

S&P 500 (F) (US500) 4,483.87 -16.66 (-0.37%)

Dow Jones (US30) 35,091.13 +1.39 (+0.004%)

DAX (DE40) 15,206.64 +107.08 (+0.71%)

FTSE 100 (UK100) 7,573.47 +57.07 (+0.76%)

USD Index 95.44 -0.04 (-0.04%)

Important events for today:
  • – New Zealand RBNZ Gov Orr’s Speech at 04:15 (GMT+2).

by Justforex, 2022.02.08

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.

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