The U.S. stock market continues to be in a sell-off

Yesterday, major US stock indices showed a sharp decline throughout the trading day, but at the end of the trading session recovered their positions sharply and closed in the green territory. By the close of the trading session, the Dow Jones index (US30) gained 0.29%, the S&P 500 index (US500) added 0.28%, and the NASDAQ technology index (US100) jumped by 0.63%. However, experts at Deutsche Bank believe that after a short-term growth, the US stock market will see a deeper sell-off.

Biotech companies Moderna and BioNTech have lost about 40% since the beginning of the year.

Analysts do not expect the Fed to change the rate at the January meeting tomorrow. However, they believe that Fed Chairman Jerome Powell's statements during the press conference will point to a rate hike in March and the end of the quantitative easing program (QE) in February, not in March. That is the reason why the US stock market has been declining so much in recent days.

In yesterday's trading, the European stock indexes showed the largest decline since November last year on expectations of the results of the first Federal Reserve meeting this year and also because of the tense situation in Eastern Europe. Germany's DAX (DE30) decreased by 3.8%, France's CAC 40 (FR40) lost almost 4%, Spain's IBEX 35 (ES35) decreased by 3.2%, and the British FTSE 100 (UK100) fell by 2.63% on Monday. The Stoxx Europe 600, the composite index of the largest companies in the region, decreased by 3.81%.

NATO may deploy additional combat units to Eastern Europe in response to Russia's military buildup on its border with Ukraine, Alliance Secretary-General Jens Stoltenberg said on Monday. Following the United States, the British, German, and Australian embassies said on Monday they were evacuating a number of personnel and their families in response to the growing threat from Russia.

Gold has managed to remain stable even as central banks have become increasingly hawkish and willing to raise rates. Volatility in the stock market has helped spur demand for safe-haven assets such as gold and the Japanese yen. Geopolitical tensions between the US and Russia over Ukraine could also support precious metals. Shares of SPDR Gold, the largest bullion-backed exchange-traded fund, recorded their biggest net inflow in dollar terms since listing in 2004 on Friday at $1.63 billion.

Yesterday, oil futures fell sharply amid a general sell-off in stock markets. The situation in the Middle East and Eastern Europe is affecting the quotes. According to a senior analyst at DTN, the rally in the oil market over the past month is "too far ahead of the realities of the physical market”. This is not the first such commentary, which indicates that analysts expect a decrease in quotes soon.

Asian stock markets are falling at the open today, despite positive momentum at the end of the trading day on Wall Street. Japan's Nikkei 225 (JP225) decreased by 1.66% from the opening, Australia's S&P/ASX 200 (AU200) lost 2.49% and Hong Kong's Hang Seng (HK50) fell by 2.64%. South Korea's index also lost 2.3% despite the country's GDP rising 4% to its highest level in 11 years. Australia's consumer price index (inflation rate) increased by 1.3% in comparison with the previous quarter and reached 3.5% in annual terms, the highest since 2014. The probability of monetary policy tightening by Australia's central bank is increasing.

Main market quotes:

S&P 500 (F) (US500) 4,410.13 +12.19 (+0.28%)

Dow Jones (US30) 34,364.50 +99.13 (+0.29%)

DAX (DE40) 15,011.13 −592.75 (−3.80%)

FTSE 100 (UK100) 7,297.15 −196.98 (−2.63%)

USD Index 95.89 +0.25 (+0.26%)

Important events for today:
  • - Australia Consumer Price Index (m/m) at 02:30 (GMT+2);
  • - German Ifo Business Climate (m/m) at 11:00 (GMT+2);
  • - US CB Consumer Confidence (m/m) at 17:00 (GMT+2).

by Justforex, 2022.01.25

We advise you to get acquainted with the daily forecasts for the major currency pairs.

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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