S&P500
The US market continues the correction.
US indices showed another strong decline on Friday. The Dow was down by 0.2%, the NASDAQ drop by 1.9%, and the S&P500 lost 0.8%.
On Monday morning, Asian stock markets were trading mixed. Japanese stock indices dropped by 0.4%. Chinese stock indices showed strong growth of +0.4%.
Brent did not plunge following the US market on Friday. Oil was up 2% on Monday. Brent was priced at $71.40. At last week's OPEC meeting it was decided that production quotas would only rise by +0.4m b/d in January. This will keep a supply shortage situation in the oil market if the global economy continues to grow at the current rate. The next OPEC meeting will take place in January.
The fourth wave has reached the highs of the third wave. However, mortality rates are below past highs. Yesterday, there were 424,000 new cases around the world. The USA, Germany, France and the UK have the largest number of infected people.
The S&P 500 is trading at 4,538. It remains in the range of 4,500-4,570.
James Bullard, president of the Federal Reserve Bank of St. Louis, said on Friday that the Fed should accelerate monetary policy tightening due to high inflation and a strong labour market. On Friday, nonfarm payrolls showed that the number of new jobs in November was significantly lower than forecast and amounted to +210 K. Monthly reports, however, are sometimes unremarkable. The unemployment rate, on the other hand, has fallen markedly from 4.6% last month to 4.2%. This allows the Fed to switch its focus to fighting inflation. The new inflation report for November will be released this Friday. This will be the main event scheduled for this week. Forecasts suggest that inflation will remain at or above the high levels of 5%. The importance of the new inflation report is additionally growing as there is a new Fed meeting next week and inflation will undoubtedly be a major topic.
A new strain of Covid-19 remains a major concern for the market. Omicron has already been detected in 16 states of the US. There is no full information about the new strain yet. It is known to be more contagious, but it is possible that its lethality is significantly lower.
The US Congress is discussing increasing the debt ceiling and passing the defense-policy bill. The Democrats will be trying to pass laws before Christmas.
The US dollar index is trading at 96.30. It is trading in the range of 96.00-96.60. The dollar is likely to remain in the current range until the Fed meeting, unless the US market shows a new big wave of decline.
The USD/CAD pair is trading at 1.2820. It remains in the range of 1.2780-1.2860. The pair showed a strong bullish reversal on Friday. The rally is likely to continue unless there is a strong rise in oil prices.
The US market has hit a bottom. We are likely to see a significant rally in the indices in the coming days and a range before the Fed decisions.
