S&P500
Omicron on the morning of February 7
The US stock indices advanced at the close of the market on Friday. The Dow remained at the same level, the NASDAQ gained 1.6%, and the S&P 500 added 0.5%.
As can be seen, technology is once again in the lead.
On Monday morning, Asian stock markets were trading mixed. Japanese stock indices dropped by 0.7%. Chinese stock indices showed strong growth of 1.6%.
Oil was up $4 on Thursday and Friday and stands at multi-year highs. Brent is trading at $93.60. The reasons for rising oil prices are the same. Demand is gradually rising as the global economy overcomes the recession due to pandemics and lockdowns, while supply is limited by the OPEC+ agreement of the exporting countries.
The S&P 500 is trading at 4,500. It remains in the range of 4,460-4,550.
At the close of last week, the US market received the January employment report, which rose by 467K. The Labour Department's warning that the data would be weak due to omicron was not true. The data came out very strong. The unemployment rate rose from 3.9% to 4.0%. This is due to the fact that many Americans have started looking for employment again. The market, however, did not show a strong increase on the jobs report. Job growth is a new argument for the Fed to hike the dollar rate.
The global infection rate is decreasing. Yesterday, +1.86 million new cases were recorded in the world. In France, there were +155K new cases. Eastern Europe has become the epicenter of the coronavirus pandemic.
The big news for the markets this week is US inflation. The CPI report for January will be released on February 10. Inflation is expected to remain high at +0.5% per month.
The Biden administration is preparing to unveil its first broad economic strategy for the Asia-Pacific region. Biden is trying to find a new agreement to replace the one that Trump withdrew from in 2017. The US aims to find an alternative to China's Belt and Road Initiative. As we can see, despite the change of administration in the US in 2020, the course towards stiff competition with China remains. The US has realized that China is a major threat to US global leadership.
The US dollar index is trading at 95.50. It is trading in the range of 95.20-95.80. The dollar index closed the week strongly down. The dollar fell 2% on the index for the week, mainly amid a rally of the euro to 1.1430 to the dollar. The euro rose after reports of a new rise in inflation in Germany and the EU as well as the ECB's decisions on Thursday to begin a gradual turn towards monetary policy tightening.
The USD/CAD pair is trading at 1.2730. It remains in the range of 1.2680-1.2760. The pair rallied on Friday despite a new surge in oil. The 1.2680 level looks like a strong bottom. The rally will continue if the dollar is able to start a correction.
The US market is ready to new rally. However, the upside potential is low and this is reducing buying activity.