S&P500
COVID-19 data as of early February 14
The US stock market dropped sharply on Friday, with major indexes closing in negative territory. The Dow Jones lost 1.4%, the NASDAQ dived by 2.8%, and the S&P 500 decreased by 1.9%.
Early on Monday, Asian markets slid down as well - the Nikkei 225 and the Shanghai Composite lost 2.3% and 1% respectively.
Amid the stock market slump, oil prices rose to new yearly highs. Brent increased by $4 to $95 per barrel from its previous session price of $91.
The S&P 500 is trading at 4,418 and is expected to be in the 4,380-4,460 range.
Friday's stock market dive was triggered by soaring inflation, as well as increased tensions between Russia and Ukraine. According to the CPI data for January, which was released last week, inflation in the US soared to 7.5% YoY. Geopolitical risks posed by a possible war between Russia and Ukraine has also put pressure on the stock market.
The number of new Omicron infections is now decreasing, with most confirmed cases being registered in Eastern Europe. 1.5 million infections were reported worldwide yesterday, which is more than 2 times lower compared to the highs of late January. 200,000 cases were reported in Russia, Germany registered 108,000 cases. 86,000 cases were reported in France, down from 400,000 last week.
According to a report by the International Energy Agency released on Friday, oil stockpiles in OECD countries fell by 60 million barrels in December, reaching the lowest level in 7 years. The price of crude oil is now at its highest level since September 2014.
Canadian police has cleared the Freedom Convoy blockade at the Ambassador Bridge, linking Canada and the US. Earlier, truck drivers blocked the bridge to protest quarantine restrictions.
This week's economic calendar is light, with the most important events being the PPI data release on Tuesday and retail sales data on Wednesday. Market players are now waiting for March's Fed meeting, which is expected to raise the Fed funds rate.
USDX is trading at 96.00 and is expected to be in the 95.70-96.30 range. On Friday, the US dollar index made slight gains on US inflation data. However, the stock market slump put pressure on USDX. Market players likely do not expect the US regulator to hike the rate significantly
USD/CAD is trading at 1.2730 and is expected to be in the 1.2700-1.2780 range. Even though the pair is likely to rise, rising oil prices are pushing it down. USD/CAD is likely to stay within the price range.
The US market expects war to break out between Russia and Ukraine, which is uncertain. If there is no outbreak of hostilities in Eastern Europe, the stock market could rally this week.