S&P 500
Ahead of Christmas, the US stock market edged higher, hitting one-year highs.
Major US indices posted solid gains for a third straight session on Thursday: the Dow Jones added 0.6%, the NASDAQ gained 0.9%, and the S&P 500 advanced by 0.6%.
S&P 500: 4,726
As you can see, the main US index closed the last active trading week of the year above the 4,700 mark. Since the beginning of the year, the S&P 500 index has gained 25%. Such significant growth can be attributed to huge spending by the Trump and Biden administrations that kept the country's economy and its population afloat during the COVID-19 pandemic. Besides, the index was supported by the Fed's massive liquidity injection of cash into the economy in the 2020-2021 period. On the other hand, all this led to high inflation in the United States as well as around the world in the second half of 2021. In the US, inflation rose by 6.8% in November, hitting a 30-year high. That is why the Fed is forced to tighten monetary policy. Thus, the Fed agreed to double the reduction of its asset-purchase program to $30 billion a month. Purchases would be phased out completely in April. If the inflation rate does not fall significantly by April, the Fed will most likely raise interest rates. The cycle of rate hikes from the Fed will lead to a slowdown in US economic growth. This, in turn, may cause a new economic crisis in 2022.
Note that, despite two attempts by the market to organize a large correction, we did not see a real correction of the US market in December. However, there is a good chance that a major correction is expected in January.
Energy market. Oil meets Christmas at December highs, Brent: $76.40
Gas prices saw sharp fluctuations on the ICE Europe in the last two days. They surged to $2,000 and then eased to $1,500. The issue of the gas crisis in Europe has not been resolved yet. This means that it will remain one of the main topics for the European market in January.
Covid-19 in the world. In the world, the number of new cases rose by 978K, hitting a new high since the pandemic began. The US reported an increase of 267K cases yesterday. Britain anf France posted 119K and 91K new infections respectively. At the same time, the mortality rate is much lower than previous highs. The US reported 1,160 deaths. Britain's mortality rate is at a low level, with an increase of 147 deaths posted yesterday. We continue to monitor the situation with the new omicron variant. Federal regulators have authorized the first easy-to-take pill to treat Covid-19, a drug developed by Pfizer. It is expected to enter the US market soon.
USDX: 96.00. The US dollar index has slipped to the lows posted in December. EUR/USD has advanced to 1.1330, the high of the range, and will probably make an attempt to break through it upwards.
USD/CAD: 1.2820. Trading range: 1.2760 - 1.2880.
Conclusion. We continue to monitor the current Omicron variant situation in the world and expect a strong correction in the US market in January.
