Fed chief comments supported the stock market - 24.2.2021

On Tuesday, the US dollar index barely changed and was traded near the psychological level of 90 points. Fed Chairman Jerome Powell announced that his office would continue its low-rate policy and quantitative easing. Recall that the Fed is buying back bonds worth $120 billion a month. This could be a long-term factor in the weakening of the US dollar. Investors are looking forward to a global economic and trade recovery amid the Covid-19 mass vaccinations. Against this background, a variety of commodities continue to rise in price and the currencies of commodity countries are strengthening. In particular, the Australian and New Zealand dollars updated their highs since 2018. Today, the Reserve Bank of New Zealand (RBNZ) kept rates at 0.25%. British Prime Minister Boris Johnson has revealed a plan to phase out the coronavirus quarantine measures. After that, the pound soared to almost a 3-year high. Approximately 27% of British people have been vaccinated by now. The 1st phase of quarantine lifting will begin there in 2 weeks. New Residential Sales are due in the US today.

There was no single trend on the US stock market on Tuesday. The Dow Jones and S&P 500 rallied, while the Nasdaq went down. Fed Chairman Jerome Powell's statement on continued soft monetary policy weakens the exchange rate, but at the same time supports the rise in the US stock market. Jerome Powell also noted that GDP growth by 6% this year and recovery of total production to pre-epidemic levels are not excluded. The main reason for this is the high rate of vaccination in the USA. About 1.5 million Americans are vaccinated daily against coronaviruses. Bitcoin plummeted 16% after several US officials feared that its boom might be a sign of dollar inflation. Tesla shares fell 20%. Its head, Elon Musk, had previously supported the expediency of buying cryptocurrencies. However, the drop in Tesla quotes could be due to its merger with a competitor Lucid Motors.

World oil prices are down today. The Independent American Petroleum Institute (API) reported an unexpected increase in US oil reserves by 1 million barrels, though they were expected to fall by 5 million barrels. Official data on stocks will be available today. S&P Global Platts estimates that 15% of US oil refineries have not yet recovered from the extreme cold. Note that yesterday world oil prices rose markedly thanks to the Fed's statement on the imminent recovery of the US economy.