S&P500
The US market plunged to new lows for the year.Biden hints to Putin that peace talks on Ukraine are possible.The main stock indices dropped sharply at the week's opening. The Dow Jones shed 2%, the NASDAQ Composite declined by 4.3%, and the S&P500 decreased by 3.2%.The S&P 500 is trading at 3,991. It stays in the range of 3,970 – 4,030.Notably, S&P500 futures are up +1% on Tuesday morning, hinting at the possibility of a strong market bounce upwards as early as today.Last night Biden signed the Lend-Lease Act into law for Ukraine. It makes it dramatically easier for the US president to provide military aid to Kiev. At the signing, however, Biden hinted to Putin that peace talks might be the best outcome for the Kremlin. Biden said Putin was a practical man and had no way out of the situation in Ukraine and that bothered him.Notably, it was the Lavrov-Blinken consultation in Europe scheduled for February 24 for a possible Biden-Putin meeting for security talks. However, after what happened in Ukraine on February 24, Washington said it had no interest in talks in the coming days. Now that, from Biden's perspective, the Kremlin has reached an impasse in Ukraine, Biden is hinting to Putin that peace talks are the best option to resolve the situation.Oil fell sharply yesterday following the US market crash. Brent dropped by 6% yesterday and is trading at $105 on Tuesday.The S&P500 index fell below 4,000 for the first time since March 2021. New lows for the year are shown. Right now, there is no reason to buy, except for the argument that the market is the cheapest now since the beginning of the year. Technically, it is correct to wait for a strong rebound upwards and only then buy after a strong market pullback downwards. One of the reasons for the market decline is the rise in US government bond yields and the expectation of a further rise as the Fed is still willing to raise rates and reduce the money supply.German authorities are preparing an action plan in case of a sudden and complete cut-off of gas supplies from Russia. In the EU, the fight over the Kremlin's sanctions package for Ukraine continues. Some countries, like Hungary, are blocking a ban on buying oil from Russia. The EU is trying to persuade these countries in exchange for concessions for some of them. The G7 meeting took place at the weekend, confirming strong support for Ukraine both militarily and economically. European Commission head Ursula von der Leyen said on Tuesday that there was progress in negotiations with Hungary - but the issue had not yet been resolved (on oil).The US dollar index is trading at 103.70. It is likely to remain in the range of 103.40-104.00. The dollar is at the highs of the year. A strong correction and a rise in the euro against the dollar are possible.The USD/CAD pair is trading at 1.3010. It is likely to stay in the range of 1.2960 - 1.3080. The pair has broken through the long-term highs and is out of a very long range. Technically there is a big trend signal at 1.3400 and above. However, there could be a strong pullback on the dollar and a good entry point in case of a correction.The big news on the US is Wednesday's inflation report. Inflation is expected to decline significantly. This could trigger a strong rebound in the US market upwards and a bounce of the dollar downwards.Intense shelling of various Ukrainian cities has continued over the past few days. At least seven Russian missiles struck Odessa. Heavy artillery fire has been fierce on the line of contact. However, Ukrainian troops are fiercely defending themselves. In the northern zone of the conflict, Ukrainian troops have pushed the Russians back a notable distance from the outskirts of Kharkiv.Overall, the conflict is clearly moving into a protracted positional phase. Neither side has a significant advantage or reserves to change the situation in its favour with a sharp blow. Of course, peace talks and a ceasefire would be an excellent way out, but the sides have very different requirements for a peace agreement. Ukraine is not ready for anything less than the withdrawal of Russian troops to the February 23 line. For the Kremlin, this is an obvious admission of military defeat. This is the impasse of which Biden spoke.
