The results of today's US Senate elections in the state of Georgia may affect the market dynamics  - 5.1.2021

The US dollar index rose on Monday amid the run-off elections to the US Senate elections in Georgia. Investors believe that the Democrats' victory will allow them to increase corporate taxes in order to raise more funds to stimulate the American economy hit by the coronavirus pandemic. This could ease the pressure on the US dollar due to the Fed's quantitative easing. An additional positive factor for the US currency was the growth of the Markit Manufacturing PMI in December, which exceeded forecasts. The US dollar is slightly lower this morning on the back of its sales by the People's Bank of China (PBOC) and the strengthening of the yuan.

On Monday morning, American stock indices updated their all-time highs, but then fell significantly at the end of the day. The main reason for this was the risk of tax increases if Democratic candidates win the Senate elections in Georgia. Such plans have been previously announced by US President Joe Biden, but he needs the support of the Senate for it. Another negative factor for the stock market was the continuing increase in the number of coronavirus cases in the United States, despite the creation of several vaccines. ISM Manufacturing PMI for December will be published in the US today. The forecast looks a bit negative. 

World oil prices yesterday updated their maximum since February 2020, but declined for the whole day. OPEC+ failed to agree on an increase in production from February this year, so the discussion will continue today. Oil quotes are growing at the moment, and, probably, this has been influenced by the aggravation of the political situation around Iran. The US accused Iran of uranium enrichment. Iran seized the South Korean tanker Hankuk Chemi, accusing it of polluting the environment. Recall that OPEC+ is increasing production by 500,000 barrels per day since January. Previously, another similar increase in oil production was expected in February. An additional negative factor that influenced oil quotes was another tightening of quarantine in Britain due to the emergence of a new strain of coronavirus.