S&P500
Omicron as of the morning of January 31.
The US market closed higher at the end of a roller-coaster week.
On Friday, US stocks scored gains. The Dow added 1.7%, the NASDAQ grew by 3.1%, and the S&P500 increased by 2.4%.
Japanese stock indices showed strong growth of +1.2% on Monday.
Brent Crude oil futures for March amounted to $91.10 per barrel. This is the highest oil price level since 2014, when oil started a long decline from $100 per barrel.
The gas crisis in Europe is not easing. Gazprom is not increasing its supply to Europe, limiting itself strictly to the volume of long-term contracts previously signed. Europe fears a complete supply stoppage in the event of a Russia-Ukraine military conflict. Liquefied natural gas carriers have recently been diverted from Asia to Europe. Yesterday, Germany reported that Gazprom has not yet submitted documents for Nord Stream 2 certification. The certification will probably not take place before midyear.
At the beginning of the week, the US market has formed a strong bottom, the correction is over, and the market is ready for a new upward wave.
Last week there were several major events. The Fed announced that it is ready to start raising the dollar rate in March to combat inflation. US GDP grew at a very high annual rate of +6.9% in the 4th quarter. For the year, it gained 5.5%. Core inflation rose to a high +4.9% year-on-year in December.
The S&P 500 is trading at 4,430. It stays in the range of 4,410 – 4,470.
Reports show that US wages rose in Q4 at the fastest pace in many years. High wage growth is a clear sign of the last phase of the economic growth cycle. In the latter phase, wages always rise, accelerating inflation and forcing the central bank to raise rates. A rate hike in turn accelerates the end of the growth cycle.
This week, important reports on the economy for the first month of 2022 will be released. Tuesday and Thursday will see the release of the ISM manufacturing and non-manufacturing indices. The employment reports from the ADP and nonfarm payrolls for January will be published on Wednesday and Friday. The US government has already warned everyone that the employment report could be significantly affected by the Omicron outbreak in January.
The global infection rate is decreasing. Yesterday, +2 million new cases were recorded in the world. France reported +250K new infections. In the UK, the number of infections has dropped by three times. The global mortality rate has risen to August figures. However, it should be taken into account that the rate of new cases is now about 5 times higher than in August, i.e. Omicron deaths are 5-10 times lower.
Construction heavy equipment supplier Caterpillar's revenue increased by 23% in Q4 on growth in demand. The US economy lost $240 billion in 2021 because of a chip shortage due to a supply disruption.
The US dollar index is trading at 97.10. It is trading in the range of 96.80-97.40.
The dollar index showed a strong gain last week after the Fed reported readiness to start raising rates in March. A continuation of the hike is possible.
The USD/CAD pair is trading at 1.2730. It is likely to stay in the range of 1.2680 - 1.2780. The pair rallied along with the US dollar. However, a new surge in oil prices is adding to the selling pressure.
Despite a tightening of the Fed's course, the US market is likely to post a new wave of gains in the coming days.