S&P500
The US market showed strong gains on Thursday despite the start of a Fed rate hike.
The Dow added 1.6%, the NASDAQ rose by 3.8%, the S&P500 gained 2.2% on Wednesday.
Oil can't keep above $100. Texas Intermediate crude is trading at $96.60 on Thursday. In recent days, the media reported that British Prime Minister Johnson, as spokesman for the importing countries, is trying to persuade the governments of major oil-producing countries in Saudi Arabia to increase oil supplies in order to stop the price increase caused by the conflict in Ukraine.
The S&P 500 trades at 4,358 and is expected to be in the range between 4,320 and 4,380.
Yesterday the Fed raised rates from a range of 0.0 - 0.25 to a range of 0.25 - 0.5%. The increase was 0.25%. This was the first rate hike since 2018 and rates have been kept at ultra-low levels since spring 2009. The Fed accompanied the rate hike with an extremely cautious comment. There were no promises of future rate hikes. However, by last night experts had already announced that the Fed would raise the rate six more times this year at +0.25%. In other words, the Fed will raise the rate at every meeting. It is clear that a rise in the cost of money is negative for the economy. It is also clear that the reason for the rate hike is very high inflation which was 7.9% in February against a Fed target of +2 - +2.5%.
The conflict in Ukraine remains a crucial topic for politicians and markets alike. Today is the 22nd day of the conflict. With each passing day, the likelihood that the conflict has moved into a positional protracted phase grows. Biden said the same yesterday, following Zelensky's speech to the US Congress. Zelensky appealed to Congress for help and asked for a closure of sky over Ukraine. Zelensky showed the congressmen gruesome video footage of the enormous destruction of peaceful facilities in Ukrainian cities during the conflict and video of the suffering of civilians and refugees.
Biden called Russian President Putin a war criminal. Yesterday, the UN international court in The Hague demanded that Russia immediately cease military action in Ukraine. Biden yesterday announced $800m in new aid to Ukraine, including air defence equipment. NATO has rejected the idea of a no-fly zone because it requires shooting down Russian warplanes and missiles over Ukraine. This could be the start of a war directly between NATO and the US and Russia, which the West is trying hard not to allow. After the Russia-Ukraine talks, it was announced that the positions of the sides had become more realistic. However, there is no breakthrough in the negotiations as of Thursday. Both negotiations and hostilities between the sides continue.
The US market appears to have shown strong gains despite a Fed rate hike. Overall, there is no progress on the end of the conflict in Ukraine. This indicates a strong upward sentiment among investors. We expect the US market to rise again in the coming weeks. Perhaps it will come after a correction.
The US Federal Reserve forecasts a 1.9% rate hike at the end of the year. The inflation forecast is raised to 4.3%. GDP growth is expected to be 2.8%, while unemployment is expected to be 3.5%.
US oil inventories rose sharply by 4.3m barrels over the week, while gasoline stocks fell by 3.6m barrels.
Growth in US retail sales decelerated sharply in February. It was lower than in January and below forecasts of +0.3% month-on-month. Price increases are likely to have contributed to this.
USDX is at 98.40 and is likely to trade in the range between 98.10 and 98.70. The dollar declined moderately yesterday despite a Fed rate hike. The dollar has probably reached some current balance.
USD/CAD trades at 1.2680 and is seen moving in the range of 1.2550-1.2800. The pair fell markedly yesterday on the decline of the dollar. A move towards the bottom of the range is likely.
The US market is ready to continue rising. However, this could come after a noticeable pullback.