Good corporate reporting pushes the US and European stock indices up

On Wednesday, the US stock indices closed in the green zone thanks to positive reports from many companies. By the close of the stock market, Dow Jones (US30) gained 0.86%, S&P 500 (US500) added 1.45%, and NASDAQ (US100) technology index jumped by 2.08%.

Among Dow Jones index components, the leaders of growth were shares of Walt Disney Co, up 8.7% on the report, Intel Corp +2.3%, Microsoft +2.2%, and +2.1%.

Investors are confident that the Fed will raise interest rates at its March meeting. On Wednesday, Cleveland Federal Reserve President Loretta Mester said she saw no good reason to start with a 50-basis-point rate hike at once. However, Mester added that future rate hikes after March would depend on the strength of inflation and how much it slows down or persists. The US inflation report for January will be released today. Analysts expect consumer prices to rise 0.4% month-over-month to 7.3% in annual terms. If the data comes out worse than expected, the dollar index could jump, and stock indices could fall amid investor fears that the Federal Reserve will be more aggressive in its monetary policy.

Rafael Bostic, president of the Federal Reserve Bank of Atlanta, predicts three interest rate hikes of at least 0.25% in 2022. He said there is a possibility of four hikes if inflation continues to rise. Bostick is not voting on the Federal Open Market Committee (FOMC) this year.

On Wednesday, Uber Technologies Inc reported its second straight quarter of operating profits as demand for ride-hailing services approached pre-pandemic levels, and its food delivery service finally turned profitable. The company's stock increased nearly 6% on the report after the market closed.

European equity markets closed with growth yesterday. Germany's DAX (DE30) and France's CAC 40 (FR40) increased by 1.5%, Spain's IBEX 35 (ES35) added 2%, and the British FTSE 100 (UK100) increased by 1%. There is a decrease in the yield of government bonds in European markets. Falling bond yields increase the attractiveness of equities as an investment instrument, especially in tech stocks. According to EU DRAFT, inflation in the Eurozone is projected at 3.5% in 2022 and 1.7% in 2023. Meanwhile, GDP growth is projected at 4% in 2022 and 2.7% in 2023.

The US oil inventories are down 4.8 million barrels over the week. Decreasing inventories is a sign of a supply shortage, which positively affects the growth of oil prices. In turn, rising oil prices strengthen commodity currencies such as the Canadian dollar.

Asian stock markets are mostly rising today. Japan's Nikkei 225 (JP225) increased by 0.42%, Australia's S&P/ASX 200 (AU200) added 0.28%, and Hong Kong's Hang Seng (HK50) gained 0.14%.

China's troubled real estate developer, China Evergrande Group, plans to fully resume the construction of new projects and start selling them while refusing to sell assets at a discounted price to pay off its debt as soon as possible. The company's shares increased by 3% in Hong Kong trading. Following Evergrande, shares of other Chinese real estate developers are also rising.

Main market quotes:

S&P 500 (F) (US500) 4,587.18 +65.64 (+1.45%)

Dow Jones (US30) 35,768.06 +305.28 (+0.86%)

DAX (DE40) 15,482.01 +239.63 (+1.57%)

FTSE 100 (UK100) 7,643.42 +76.35 (+1.01%)

USD Index 95.55 −0.09 (−0.10%)

Important events for today:
  • – Japan Producer Price Index (m/m) at 01:50 (GMT+2);
  • – UK BoE Gov Bailey’s Speech at 11:05 (GMT+2);
  • – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+2);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+2).

by Justforex, 2022.02.10

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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