Moderate growth of inflation allowed the stock market to resume its rally

Weaker-than-expected inflation data eased concerns concerning the need to scale back the Fed's stimulus program. After the release of the report, the growth of Treasury yields stopped, and at the end of the American session, the yield fell to 1.50%. Cyclical stocks continue to grow amid expectations that the economic recovery will accelerate following the entry into force of the stimulus package from the US government.

The consumer price index, excluding food and fuel, increased by 0.1% compared to January. The annual rate is kept at 1.3%. The general CPI increased by 0.4% compared to the previous month and by 1.7% from a year earlier.

Against the background of low inflation rates, the stock market's growth resumed. Dow Jones has updated its annual highs. Asian stocks followed the US stocks. China's CSI 300 has indicated the largest gain in two months. S&P 500 futures continue to rise in the European session and are already close to this year's records.

Meanwhile, the Bank of Canada left monetary policy unchanged. Interest rates and asset purchases remain the same. In Wednesday’s statement in Ottawa, there is a promise not to raise interest rates on loans until the damage from the pandemic is completely reversed. Also, the monetary regulator stressed that the labor market is still far from recovery.

There are no changes in the statement after the last meeting of the Bank of Canada in January, which is slightly contrary to market expectations. According to economists, the expected rapid rebound of the economy this year may lead to a reduction in asset purchases by the monetary regulator. According to the Canadian Imperial Bank of Commerce, the signal for a reduction in the volume of stimulus measures will still be received at its April meeting when the quarterly forecasts will be updated and a press conference will be held.

Main market quotes:

S&P 500 (F) 3,923.62 +27.12 (+0.70%)

Dow Jones 32,297.02 +464.28 (+1.46%)

DAX 14,539.15 -1.10 (-0.01%)

FTSE 100 6,733.65 +8.05 (+0.12%)

USD Index 91.580 -0.248 (-0.27%)

• – ECB Interest Rate Decision (Mar) at 14:45 (GMT+2);
• – US Initial Jobless Claims at 15:30 (GMT+2);
• – ECB press conference at 15:30 (GMT+2).

by JustMarkets, 2021.03.11

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.