The stock market continues a confident rally. The dollar index is prone to growth

On Thursday, the results of the ECB meeting somewhat disappointed investors. Promises to increase the speed of assets purchases don’t indicate an increase in the final volume of the program for 1.85 trillion euros. If the monetary regulator increases the speed of purchases in the next three months, then the volume may decrease. Against this background, the euro reduced the losses incurred in the European session, and by the end of the day increased by 0.47% to 1.1985.

At the beginning of the European session on Friday, new GDP data were received from the UK National Statistics Office. In January, the economy decreased less than expected during a quarantine that closed schools and some retail stores. Gross domestic product decreased by 2.9% after increasing by 1.2% in December. Economists forecasted that there will be a decrease by 4.9%.

The data will influence the Bank of England's decision next week on whether the UK needs more stimulus for recovering from its biggest recession in three centuries.

Another report indicated the strongest monthly decrease in manufacturing output since April last year by 1.5%. The indicator is much worse than market forecasts: the average median of the forecast assumed a reduction by 0.6%.

The situation points to an uneven recovery of the global economy. Investors are increasingly focused on a faster recovery of the US economy, which supports the demand for risk. After a slight decline in government bond yields, there is less concern that the recovery from the pandemic will cause excessive inflation. However, Treasury yields are still showing an upward tendency, which could still trigger another wave of declines in stock prices. With the opening of the European session, the indicator returned to the level of 1.60%.

Main market quotes:

S&P 500 (F) 3,922.38 -14.37 (-0.37%)

Dow Jones 32,485.59 +188.57 (+0.58%)

DAX 14,492.45 -76.94 (-0.53%)

FTSE 100 6,716.95 -20.01 (-0.30%)

USD Index 91.757 +0.339 (+0.37%)

• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Manufacturing Output (m/m) (Jan) at 09:00 (GMT+2);
• – US Producer Price Index (m/m) (Feb) at 15:30 (GMT+2);
• – Canada Employment Change (Feb) at 15:30 (GMT+2).

by JMarkets, 2021.03.12

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.