Market Trends: what to expect in February?

Pay attention to the major market events for this February!

Check out our overview of last month’s most important market movements and our outline of what to keep an eye on over the coming month.

The main market drivers

At the FOMC meeting, the Fed doubled the pace of tapering, promising to complete its balance sheet purchases as early as March.

Furthermore, the regulator hinted at a possible rate hike in the same month.

It is worth noting that markets were pricing in an increasingly steeper policy tightening in January.

This put pressure on equities and spurred purchases of the US currency.

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What to look out for this month!

Expectations for the pace of Fed rate hikes continue to increase, accelerating the rise in the dollar.

At the end of January, investors were pricing in five rate hikes in 2022.

However, this may not be enough to curb inflation.

It is quite possible that a balance sheet contraction could start as early as this year.


After a two-month lull, the euro was down to 1.1120, renewing a 1.5-year low due to a rising dollar.

In contrast to the Fed, the markets have not seen any sign of an acceleration in policy normalisation from the ECB.

Look out for: So far, tensions in Eastern Europe, as well as high energy prices, have not really hurt the euro.

In February, however, investor attention could accelerate the surrender of the euro bulls.

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Gold is pressured amid Fed comments on monetary policy and a rising dollar.

Losing more than 3.5% after the Fed meeting, the metal is back to the low of the month, breaking the 2-month uptrend.

Look out for: A rising dollar prevents gold from finding a solid base.

Meanwhile, rounds of interest rate hikes are weakening the precious metal’s appeal as a method of preserving capital.

While investors are pricing in increasingly rapid normalization of interest rates, pressure on gold could remain the overriding theme.

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Brent Oil hit new 7-year highs above $90 at the end of January, firmly continuing the uptrend since early December.

The rise is fuelled by the tense geopolitical situation in Eastern Europe and the Middle East, which poses a direct threat of disruption to crude supplies.

Look out for: Oil has so far been able to withstand a rising US dollar and a reduced demand for risky assets.

Nevertheless, both factors are fundamentally negative for Brent.

It is difficult to predict how long the black gold can be supported by geopolitics and rapid recovery in energy demand.

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The US broad market index first hit an all-time high on the 4th of January and then came under persistent selling pressure.

Already 20 days after peaking, the S&P500 was down 12.5%.

Look out for: By the end of the month, the stock market had been flooded with bargain hunters.

A buying wave provided local support for the index.

However, there is little strength left for the buyers by early February.

The increasing tightening of US monetary policy and the generally fragile state of the markets should be taken into account.

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