The US S&P 500 and Dow Jones indices remained at about the same price levels as yesterday. But the Nasdaq reached another all-time high. This is not surprising, as the technology sector has failed to keep pace with the major indices in recent weeks. Overall, the markets calmed down a bit after Powell’s speech on Monday, which downplayed the risk of a rapid tightening of monetary policy. The PMI industrial index showed that the US economy is recovering at a rapid pace. Therefore, it is very likely that the major indices will continue their global upward trend until August. It is important for investors to monitor labor market indicators, which significantly influence the Fed’s actions. If the labor market shows a positive trend by the month of August, the Federal Reserve may reduce stimulus payments at its next meeting, which will undoubtedly lead to a drop in indices.
Positive PMI data stimulated the strengthening of European currencies. However, Europe’s major indices slightly decreased by the end of the day. In general, the European economy is on the rapid way to recovery and is highly dependent on the Fed’s rhetoric. Today, the Bank of England will report on its monetary policy in the UK. Analysts believe that the interest rate will remain unchanged.
Gold is still in a flat position. Analysts believe the fundamental picture for gold and silver is positive, but technically the price may still decrease for a bit before a new uptrend begins.
On Wednesday, oil prices hit new highs from 2018. The reserves of crude oil in the United States showed an unexpected fuel shortage. The fundamental picture is in favor of a further rise in quotations. But the technical picture shows that oil reached the weekly resistance level, so a correction wave to $68-70 per barrel of WTI is possible in the near future. Natural gas storage report is expected today.
Asian markets are also making no progress. This is not surprising as the Asian stock market is now highly correlated with the US stock market. In Australia, there has been a dramatic increase in the incidence of the new strain of coronavirus Delta, and there have been discussions on imposing severe restrictions.
Main market quotes:
- S&P 500 (F) 4,241.84 -4.60 (-0.11%)
- Dow Jones 33,874.24 -71.34 (-0.21%)
- DAX 15,456.39 -179.94 (-1.15%)
- FTSE 100 7,074.06 -15.95 (-0.22%)
- USD Index 91.85 +0.09 (+0.10%)
Important events:
- Germany Ifo Business Climate Index (m/m) at 11:00 (GMT+3);
- UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+3);
- UK Monetary Policy Statement at 14:00 (GMT+3);
- US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
- US Final GDP (q/q) at 15:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- Natural Gas Storage (w/w) at 17:30 (GMT+3).
