FX.co ★ US stock market may rise, whereas US may fall amid inflation report

S&P500

Global epidemiological situation on February, 10.

The US stock market has been rapidly growing for two days in a row.

US main stock indices closed with a rise. Thus, the Dow Jones added 0.9%, the NASDAQ Composite rose by 2.1%, and the S&P500 climbed by 1.5%.

On Wednesday, Asian's indices opened mixed. Japan's index rose by 0.4%, whereas China's index lost 0.7%.

Energy. Oil is hovering near its highs. Brent crude is trading in a narrow range of $90.0-92.5. Today, it has reached the level of $91.50.

In Europe, gas futures are losing value. Yesterday, they dropped below $900 per 1 thousand cubic meters. The price is falling since the winter and heating season in Europe are coming to an end. The weather is quite warm and demand for gas is sliding. At the same time, Norway said that its supply of gas to Europe reached record high and could not be increased. Gazprom also denies to raise gas supply to Europe, expecting the launch of Nord Stream 2. That is why Europe is searching for other suppliers among the world's largest producers, including Qatar, Algeria, and Azerbaijan.

The S&P500 is trading at 4,587. The range is 4,550–4,620.

In one week, US oil reserves dropped by 4.7 million barrels, whereas petrol and distillate reserves slid by 1.6 million barrels and 0.9 million barrels respectively. Notably, a slump in oil reserves exceeded the forecast.

In general, the US market situation is quite calm since there is no news. The US inflation report for January is the main event of the week. The report will be published today together with unemployment claims. According to the forecast, inflation may remain high. Thus, on a monthly basis, it may advance to 0.5%, whereas on a yearly basis - to 6%, significantly exceeding the Fed's targeted level of 2.5%. Such results are likely to force the regulator to raise the key interest rate.

The Fed intends to raise the benchmark rate in March. At the same time, the President of the Deutsche Bundesbank said that the ECB might raise the interest rate this year. However, early this week, Christine Lagarde said that the ECB did not have any reasons to hurry. In fact, the EU's inflation is twice higher than the targeted level of approximately 5% on a yearly basis. Most global central banks are trying to delay the interest rate hike since it may slacken or cap the economic growth.

Global epidemiological situation

Yesterday, the number of new virus cases added 2.4 million, which is 40% lower than in January. Germany reported on 238 thousand and Russia – on 180 thousand. Meanwhile, Sweden and Czech Republic are planning to lift all restrictions since Omicron is not very dangerous and about 75-80% of people are vaccinated. Italy may withdraw containment measures in March.

The US financial market regulator, the SEC, is preparing general rules for hedge funds and private investment funds with requirements for disclosure of information on previous results.

USDX is trading at 95.50, the range is 95.20-95.80. Since the beginning of the week, the US dollar index has been hovering within a narrow range like the euro. Today, the market is expected to start moving after the publication of the US inflation report. It is more likely that the euro will rise, whereas the greenback will fall.

USD/CAD is trading at 1.2670, the range is 1.2600-1.2800. The pair is approaching a low. If the US dollar drops, the pair may slide to 1.2580.

Conclusion: the US stock market may continue growing. The greenback may decline amid the US inflation report.