Painfully getting higher. Risk appetite dominates

Wall Street recovered relatively quickly from a difficult start to the year. Markets have become more optimistic about the health of the US economy, betting on the artificial intelligence boom and looking at current company performance. Stock indexes are again setting new all-time highs. The Dow Jones gained 0,4%, the SP500 closed the day higher by 0,2%. and the technological Nasdaq Composite increased by 0,3%.

She gained a lot Petroleum after the drone attack on Russia's Novatek. In turn, the Bank of Japan this morning maintained the ultra-easy parameters of its monetary policy, but Ueda's words during the press conference strengthen the yen.

Has the US economy slowed down?

Risk appetite among investors continues to dominate. This is evidenced by the repeated records of the SP500 and Dow Jones. Index Nasdaq Composite There is still some way to equalize your ATH. This week the market will assess how much the US economy slowed down in the fourth quarter. We will receive this data on Thursday. A day later, on Friday, attention will be focused on the report on Americans' spending. What should be taken into account here is what the Fed's preferred measure of PCE and PCE core inflation will develop. The monthly dynamics should increase to 0,2%.. On an annual basis, headline PCE is expected to fall from 3,2%. up to 3 percent and the base rate is to remain at 2,6 percent.

There was greater volatility in crude oil prices yesterday. WTI gained 2,4%. and Brent 1,9 percent. The increases are a consequence of, among others, greater concerns about global energy supplies after the Ukrainian drone attack on the Russian one Novatek. The price is also affected by low temperatures in the US, which hamper oil production, mainly in North Dakota. Over 20 percent percent production in the third-largest oil-producing state remained closed Monday. In the previous week, production had already been halved. On the other hand, the growth prospects for China and Europe are mixed, which negatively affects demand. Oil may also be more volatile on Thursday, when US GDP data for the final quarter of last year will be released.

Change of tone of the BOJ president

The Bank of Japan maintained the parameters of its ultra-loose monetary policy, which was widely expected. The institution determined that the probability of the economy achieving lasting inflation is 2%. continues to “increase gradually.” Many market participants expect that The BOJ will end negative interest rates later this year, and a recent Reuters poll indicates that April is the most likely time. At a two-day meeting that ended Tuesday, the BOJ left its short-term target interest rate unchanged at -0,1% and the 10-year bond yield at around 0%. The central bank has maintained negative interest rates since 2016.

During the BoJ chairman's press conference, the yen gained a value USD/JPY pair fell below 147,00. Ueda said more companies have opted for wage increases this year compared to last year. He stressed that there is great uncertainty about how widespread they will be. He added that the side effects of negative interest rate policies cannot be denied. He also admitted that the BoJ anticipates increases after the end of the current stage of expansionary monetary policy. He stated that the bank will have more up-to-date data at its April meeting. There was a noticeable change in tone in Ueda's comments compared to his previous press conferences.

Source: Łukasz Zembik, OANDA TMS Brokers