The stock market is gaining momentum again as a new economic stimulus is around the corner. The dollar is falling

There was a little bit of concern in the market on Wednesday. The dollar index skyrocketed to 90.40 amid the suspension of transactions in the Fed. Payment systems that execute millions of financial transactions per day have been shut down for about four hours due to some kind of a glitch. By the end of the day, the systems were restored, and the dollar returned to the opening price of the day and continued to decline.

It looks like the pressure on the greenback is increasing, as the demand for risky assets has become relevant again. The bonds sell-offs, which have led to economy-wide gains in yields, indicate investors' withdrawal from defensive assets. American Treasuries set a new record at the level of 1.42%. The yield is growing due to oil quoted prices to a certain degree, reflecting inflationary expectations. Brent oil exceeded $66.50 p/b, the best since January 2020.

Meanwhile, the market is getting ready to hear about new economic stimulus measures, which are scheduled to be announced at the beginning of next month. The UK Treasury Secretary Rishi Sunak will announce his decision on March 3. The Resolution Foundation Research Group urges to contribute £70 billion of targeted stimulus in addition to existing economy support programs. Such a budget will bring the UK closer to the US, where President Joe Biden is awaiting approval for a $1.9 trillion stimulus package.

JPMorgan Chase estimates that easing fiscal pressures and other stimuli of the US economy will boost output growth by 1.8% this year. However, not all G7 countries support such large amounts of stimulus. The EU members prefer to spend less budgetary funds and expect a slower economic recovery. ING Germany points out the undesirability of a short-term impulse, and the need to use money to improve the structure of the economy and achieve its stability.

Main market quotes:

S&P 500 (F) 3,919.88 -2.62 (-0.07%)

Dow Jones 31,961.86 +424.51 (+1.35%)

DAX 13,976.20 +0.20 (+0.00%)

FTSE 100 6,680.29 +21.32 (+0.32%)

USD Index 89.927 -0.243 (-0.27%)

• – US Core Durable Goods Orders (m/m) (Jan) at 15:30 (GMT+2);
• – US GDP (q/q) (q4) at 15:30 (GMT+2);
• – US Initial Jobless Claims at 15:30 (GMT+2).

by JustMarkets, 2021.02.25

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.