16 Feb

Today, investors’ attention is focused on inflation data in the UK and Canadian, as well as FOMC minutes

February 16, 2022

by JustForex

Thanks to the easing of tensions in Eastern Europe, global stock indices increased yesterday. The Dow Jones Index (US30) added 1.22%, the S&P 500 (US500) rose by 1.58%, and the NASDAQ Technology Index (US100) jumped by 2.53%.

On Tuesday, the Russian Defense Ministry said that some troops are beginning to return to their bases. The detente of geopolitical tensions has provoked an influx of investor funds into risky assets. Meanwhile, gold and oil prices declined yesterday.

The US producer price index, which measures inflation between factories and industries, rose 1% (+0.2% expected), well above analysts’ expectations.

According to preliminary information, the US Federal Reserve will begin cutting its balance sheet by $60 billion in June or July. A decrease in the balance sheet will lead to an increase in the dollar index.

European stock indices finished Tuesday’s trading with growth. The German DAX (DE30) gained 1.98%, the French CAC 40 (FR40) added 1.86%, the Spanish IBEX 35 (ES35) increased by 1.7%, and the British FTSE 100 (UK100) gained 1.03%. The Eurozone’s GDP growth estimate in annual terms was revised down from 4.7% to 4.6%. European Central Bank President Christine Lagarde reiterated that ECB officials would not rush to cancel stimulus measures in the Eurozone, as this could negatively affect the region’s economy. Markets expect a quarter-point ECB rate hike in September and December. Germany’s economic outlook continues to improve despite growing economic and political uncertainty. The ZEW Institute for Economic Research reported that its economic sentiment index rose to 54.3 from 51.7 in January. Thomas Gitzel of VP Bank said in a note that a Russian military invasion of Ukraine could derail Germany’s recovery, especially if Western powers retaliate with sanctions on Russia’s energy sector and the Kremlin cuts off gas supplies to Europe.

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On Tuesday, the Russian State Duma adopted a resolution to send Putin to recognize the Donetsk and Luhansk republics as independent states. Russia maintains ties with the self-proclaimed republics and, in particular, issues Russian passports to their residents, but at the same time claims that it is not a party to the conflict, accusing the Ukrainian authorities of failing to comply with the Minsk agreements. Ukraine considers what is happening in eastern Ukraine a war with Russia. It calls the neighboring country an aggressor, refusing to negotiate with the Donetsk and Lugansk republics representatives. German Chancellor Scholz called the possibility of Russia recognizing the independence of the Donetsk and Lugansk republics a political disaster.

Asian markets have been rising today since the opening, following the US indices. Japan’s Nikkei 225 (JP225) jumped by 2.22%, Hong Kong’s Hang Seng (HK50) gained by 1.30%, and Australia’s S&P/ASX 200 (AU200) added 1.08%. China’s consumer inflation rate fell to 0.9% in annual terms. Meanwhile, the producer prices index (PPI) fell to 9.1% in annual terms. Analysts expect the People’s Bank of China to cut interest rates in the coming months amid a difficult economic outlook.

Main market quotes:

S&P 500 (F) (US500) 4,471.07 +69.40 (+1.58%)

Dow Jones (US30) 34,988.84 +422.67 (+1.22%)

DAX (DE40) 15,412.71 +298.74 (+1.98%)

FTSE 100 (UK100) 7,608.92 +77.33 (+1.03%)

USD Index 95.98 -0.39 (-0.41%)

Important events for today:
  • – China Consumer Price Index (m/m) at 03:30 (GMT+2);
  • – China Producer Price Index (m/m) at 03:30 (GMT+2);
  • – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
  • – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
  • – US Retail Sales (m/m) at 15:30 (GMT+2);
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
  • – US Industrial Production (m/m) at 16:15 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
  • – US FOMC Meeting Minutes at 21:00 (GMT+2).

by JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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