The stock market is setting new records as the dollar index declines and commodity prices rise

On Monday and Tuesday’s Asian session, the dollar index continued to decline. Disappointing statistics on the labor market continue to affect the greenback negatively, and the movement in the commodity market only aggravates the position of the American currency.

The oil market continues to pick up speed. Brent crude exceeded $60 per barrel amid declining production and a gradual recovery in demand. Together with the expectation of new cash injections into the US economy, the growth of the commodity market puts upward pressure on inflationary expectations. The latter factor, in its turn, supports the quotes of gold, which has been growing for the third day in a row following the government bonds yield.

The precious metal showed the strongest gains since January 5 after Democrats released the first draft of a key bill that will include President Joe Biden's COVID-19 economic aid bill. Economists are assessing the likelihood of accelerating inflation, prompting investors to seek refuge in gold.

Meanwhile, the Bank of France has published encouraging forecasts for economic growth. Economic activity in the country is 5% below pre-crisis levels, but economists estimate that it is doing better than expected. After decreasing by 7% below normal during the November lockdown, there was stabilization in December and the economy is expected to remain stable throughout February, according to the central bank's monthly survey of 8,500 companies from January 27 to February 3.

Against the background of the growth of the raw materials market and bond yields, the northern trend is observed on the stock exchanges. The S&P 500 has surpassed the level of 3900.00. Treasury yields have stabilized at around 1.160%.

Main market quotes:

S&P 500 (F) 3,908.38 +0.28 (+0.01%)

Dow Jones 31,385.76 +237.52 (+0.76%)

DAX 14,039.40 -20.51 (-0.15%)

FTSE 100 6,525.75 +2.22 (+0.03%)

USD Index 90.688 -0.257 (-0.28%)

by JMarkets, 2021.02.09

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.