S&P500
The epidemiological situation in the world in the morning of February 17.
The US market lacks a strong reason for growth.
On Wednesday, main US stock indices edged down. The Dow dropped by 0.16%, the NASDAQ lost 0.1%, while the S&P500 gained 0.1 %.
On Thursday morning, Asian stock markets were trading mixed. Japanese stock indices dropped by 0.8%. Chinese stock indices showed strong growth of 0.4%.
The Russian market showed a strong 2-4% drop in the morning, following US claims that Russia had not only not withdrawn some troops from the border with Ukraine, as officially stated, but had further increased the grouping on the border in the last 24 hours.
Energy market. Oil, on the other hand, declined yesterday by $2. Brent fell to $93.50.
The S&P500 is trading at 4,475. It remains in the range of 4,440-4,510. On Thursday, S&P500 futures predict a US market drop to -0.5% at the open.
Wednesday's report showed that retail sales rose 3.8% in January. Growth had been forecast at 2.3%. This would be excellent news for the market if it were not another solid argument for a stronger rate hike by the Fed. Export and import prices also rose above forecasts by 2.9% and 2% respectively. Excluding petroleum products, the price increase was more moderate at 1.4%.
Industrial production rose by 1.4% in January. The capacity utilization rate increased by 1% to 77.6%.
Today the market will get the employment report for the week and new construction reports for January. Usually in winter there is a seasonal downturn in construction, but now the market is heated. Perhaps we will see an upward trend.
According to a UN report, the volume of world trade in 2021 will increase by 25% over the previous year. It is quite obvious that one of the main beneficiaries is China. It will be the hardest hit if a major war breaks out.
US oil inventories rose by 1m barrels over the week. A week earlier there was a big drop of 4.5m barrels.
President Joe Biden is expected to ask Congress for more than $770 billion for his US defence budget for the next fiscal year. This is about 10% more than this year. However, Congress could cut the administration's request considerably as the US budget deficit is at high levels. On February 2, the US national debt surpassed $30 trillion. This is well above the US annual GDP of $21.4 trillion. Still, the US is only 34th in the world in terms of public debt to GDP ratio. Of course, the dollar's status as the world's currency greatly reduces the impact of the national debt factor. However, US national debt is distributed to all countries that actively use the US dollar in reserves and settlements.
The minutes of the Fed meeting on January 26th showed that the Fed is prepared to raise the rate in case of high inflation. The January inflation report which showed a record +7.5% p.a. was released after the Fed meeting. The Fed's next decision will be released on March 16.
Airbus posted a profit of €4.2 billion compared with a loss a year earlier. The aviation industry has recovered from the crisis and yet it is quite clear that the pandemic is coming to an end.
The epidemiological situation in the world mostly eases. Yesterday, there were 2 million cases. The epicentre is now in Eastern Europe. Germany and Russia reported +230 K and +180 K cases respectively. Countries in Europe are either already lifting the health restrictions or plan to do so by the end of March.
The US dollar index is trading at 95.80. It is trading in the range of 95.50-96.10. The dollar is holding out. Perhaps the stagnation in the currency market will last until the Fed's decision.
The USD/CAD pair is trading at 1.2705. It remains in the range of 1.2600-1.2800.
The US market is under pressure waiting for a Fed rate hike. The state of the US economy is strong, but stock prices are also quite high.