According to Goldman Sachs, the US Federal Reserve will raise interest rates four times in 2022

The US stock market closed in mixed territory yesterday. The S&P 500 Index (US500) decreased by 0.1%, the Dow Jones Industrial Average (US30) lost 0.5%, and the Nasdaq (US100) increased by 0.05%. But all three indices demonstrated a decline throughout the trading day and only recovered their intraday losses by the end of the day.

Goldman Sachs raised its forecast for the US Federal Reserve to four rate hikes this year from the previous forecast of three. Analysts had expected rate hikes in March, June, and September and have now added a hike in December for a total of four hikes in 2022. Bank analysts believe the interest rate will be 2.5-2.75% by the end of the year.

On Tuesday, the rate hike forecast comes just one day before Fed Chair Jerome Powell's confirmation hearing, where the Fed chief may give new hints on monetary policy. For his part, Federal Reserve Chairman Jerome Powell promised to "prevent higher inflation from taking root" in comments prepared to speak at a congressional hearing where inflation was likely to be a central theme.

Pfizer and Moderna have announced a release date for vaccines against the Omicron strain. Pfizer plans to release the Omicron-adapted vaccine by March, while Moderna's booster dose is scheduled for release in the fall. Moderna raised its 2022 sales forecast for the vaccine to $18.5 billion.

European stock indexes closed lower yesterday. Germany's DAX (DE30) decreased by 1.13%, Britain's FTSE 100 (UK100) lost 0.53%, France's CAC 40 (FR40) decreased by 1.44%, and Spain's IBEX 35 (ES35) lost 0.51%. Meanwhile, the number of unemployed in the Eurozone decreased by 222,000 in the month before last. Compared to October, the unemployment rate in 19 countries of the Eurozone in November fell from 7.3% to 7.2%. ECB head Christine Lagarde is expected to speak today, where investors will expect new hints on the future monetary policy of Europe's central bank. But according to the ECB forecast published earlier, inflation in the region will fall this year and will be below the ECB's 2% target, so a rate hike by the ECB in 2022 is very unlikely.

Oil prices have stabilized in recent days. The slight intraday decrease is usually associated with a sharp rise in COVID-19 cases worldwide, which may lead to a decrease in demand for fuel. The speech of Fed Chairman Jerome Powell to the US Senate is worth watching closely today. This speech might provoke the dollar index growth, which in turn will lead to a decline in oil prices.

Asian stock indices were mostly declining yesterday. Japan's Nikkei 225 Index (JP225) decreased by 0.9%, Australia's ASX 200 (AU200) lost 0.8%, while Hong Kong's Hang Seng (HK50) was the exception, adding 0.1%. Taiwan, China, and South Korea indices also closed in the red zone at the end of the day. Yesterday, the investment director at DBS Bank in Singapore said that global markets were on the verge of inflation risks but believed the situation was under central banks' control.

Main market quotes:

S&P 500 (F) (US500) 4,670.29 −6.74 (−0.14%)

Dow Jones (US30) 36,068.87 −162.79 (−0.45%)

DAX (DE40) 15,768.27 −179.47 (−1.13%)

FTSE 100 (UK100) 7,445.25 −40.03 (−0.53%)

USD Index 95.95 +0.23 (+0.24%)

• - Australia Retail Sales (m/m) at 02:30 (GMT+2);
• - ECB President Lagarde’s Speech at 12:20 (GMT+2);
• - US FOMC Member Mester’s Speech at 16:00 (GMT+2);
• - US FOMC Member George's Speech at 16:30 (GMT+2);
• - US Fed Chair Powell’s Testifies at 17:00 (GMT+2).

by JMarkets, 2022.01.11

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.