US stocks rallied on Monday as the sharp change in energy prices eased pressure on the market. The S&P 500 reportedly gained 0.2%, while the Nasdaq 100 increased by 0.8%. This continued the growth that started last week, when solid corporate earnings and economic reports outweighed concerns on energy shortages and supply chain disruptions.
According to reports, oil prices dropped because OPEC failed to meet production targets. Such eased concerns over inflation and policy tightening.
"The problems that caused the pullback have subsided over the past two weeks, which rightly allowed the stock to rebound," said Tom Essaye, founder of The Sevens newsletter. "But these problems are not solved by any imagination," he added.
Meanwhile, Fiona Cincotta, senior financial market analyst at City Index, said: "Rising commodity prices - especially oil prices, which only seem to be going in one direction at the moment - reinforces expectations of increasingly entrenched high inflation and a faster Fed decision to raise interest rates. "
Michael Darda, chief economist and market strategist at MKM Holdings, added: "This is where we may face the risks of a recession in the future. In my estimation, this will not be a risk for next year, but it may turn out to be a shorter business cycle. "
Federal members will most likely reassure investors about potential tightening this week. At the same time, upcoming corporate earnings will give investors an insight on the resilience of companies.
Other important events for this week are:
- policy decision of the Bank of Indonesia (Tuesday);
- meeting of China's AFN Standing Committee (Tuesday);
- data on US housing construction (Tuesday);
- EIA report on crude oil (Wednesday);
- report on real estate prices and basic loan rates in China (Wednesday);
- Conference Board data on leading US indicators, report on US secondary home sales, data on US jobless claims (Thursday);
- panel discussion on policy issues (Friday).
