$Can markets recover in March what was lost at the end of February?
Dear Trader's Friend.
February has been a more modest month for major US indices compared to January's performance. We saw DJIA, S&P 500 and Nasdaq 100 indices ending the month in the red. However, the top gaining indices across the world were the Russian and the Chinese ones. The majority of major European indices have also performed quite well, with the Polish and Spanish stock markets leading the way. This positivity might have come from the fact that February was filled with talks that the Ukraine war might be coming to an end. However, as we know, nothing has been finalised yet, and there are still major roadblocks ahead to reaching a peace deal.
Here are some key highlights on the economic landscape
1. US Economy
In the US, headline inflation continues to rise, as shown in the mid-month release, where the number went back to 3%, above the Fed’s target of 2%. The core figure, which excludes fuel and energy prices, had also shifted higher, moving further above 3%. All this puts the Fed in a difficult spot, as it is still considering cutting rates later this year. At the time of writing, the FedWatch Tool is forecasting two rate cuts by the end of this year. That said, another higher-than-expected US inflation reading might force the Fed to at least reconsider one cut and just go for one. If so, there is a chance to see the US indices pushing upwards again, and the US dollar might stay subdued for some time in the near future. This might help strengthen some top currencies against the greenback.
#MarketPullback
Dear Trader's Friend.
February has been a more modest month for major US indices compared to January's performance. We saw DJIA, S&P 500 and Nasdaq 100 indices ending the month in the red. However, the top gaining indices across the world were the Russian and the Chinese ones. The majority of major European indices have also performed quite well, with the Polish and Spanish stock markets leading the way. This positivity might have come from the fact that February was filled with talks that the Ukraine war might be coming to an end. However, as we know, nothing has been finalised yet, and there are still major roadblocks ahead to reaching a peace deal.
Here are some key highlights on the economic landscape
1. US Economy
In the US, headline inflation continues to rise, as shown in the mid-month release, where the number went back to 3%, above the Fed’s target of 2%. The core figure, which excludes fuel and energy prices, had also shifted higher, moving further above 3%. All this puts the Fed in a difficult spot, as it is still considering cutting rates later this year. At the time of writing, the FedWatch Tool is forecasting two rate cuts by the end of this year. That said, another higher-than-expected US inflation reading might force the Fed to at least reconsider one cut and just go for one. If so, there is a chance to see the US indices pushing upwards again, and the US dollar might stay subdued for some time in the near future. This might help strengthen some top currencies against the greenback.
#MarketPullback