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US stock market indexes went up on Tuesday, ignoring the massive outbreak of the Omicron strain.
The Dow Jones rose by 0.5%, the NASDAQ gained 1.4% and the S&P500 added 0.9%.
The World Bank slashed its global economic growth forecast. Due to pressure from high inflation and monetary tightening by major central banks, global growth is expected to slow down to 4.1% in 2022 and 3.2% in 2023.
Oil prices increased by about $2 yesterday. The price of Brent crude reached $83.60 - the highest level since November 10. The US Energy Information Administration sees the oil price average at $75 per barrel in 2022.
Early on Wednesday, Asian markets went up following US stock markets. The Shanghai Composite gained 1%, the Nikkei 225 added 2%.
China is enacting new strict lockdowns, trying to hold back the outbreak of Omicron. New restrictions have shut down factories, which would likely result in supply issues for companies such as Toyota, Volkswagen, and Samsung.
The S&P 500 is trading at 4,713 and is expected to be in the 4,690 - 4,750 range.
The US stock market noticeably declined early on Tuesday, but rallied for the rest of the day. The main event of the day was Jerome Powell's confirmation hearing in the US Senate, with the main issue being high inflation. Powell admitted that the Fed would have to hike the interest rate, but his statement was not particularly hawkish, giving support to the market. 80% of experts see the regulator increase the rate in March, but the Fed chairman is unlikely to hurry. US CPI data for December are due today. In November, inflation reached 7.6%, with core inflation rate being at 5.6%. Worldwide food prices soared by 30% over the past year.
2.8 million new cases of Omicron were reported worldwide yesterday. The total amount of new infections reached 1.4 million in the US, 370,000 in France, 220,000 in Italy, and 200,000 in India. Russia is expecting an outbreak in Moscow, which could begin next week.
The US stock market is ignoring all reports about Omicron, such as businesses being disrupted by large numbers of sick employees, Although no more than 10% of infections require hospitalization, the huge infectivity of the strain could overwhelm hospitals, unless this wave of the pandemic stops quickly.
USDX is trading at 95.50 and is expected to be in the 95.20-95.80 range. The index is near the lower level of the range and is awaiting US CPI data.
USD/CAD is trading at 1.2550 and is expected to be in the 1.2480 - 1.2600 range. So far, the pair has broken through the lower border of the price range amid rising oil prices and declining USD. The quote could continue to fall towards 1.2480.
The US stock market is awaiting inflation data, while completely ignoring the negative impact of the Omicron strain. The collapse of the healthcare system could be only days away, and it could send the market into a nosedive. Investors should exercise caution in the current situation.
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