According to the minutes of the Fed’s meeting in June, which were published yesterday, Fed officials are ready to take steps to reduce asset purchases as early as 2021. But the target for the beginning of the reduction of the monthly bond purchases has not yet been reached. There is some kind of uncertainty about the timeframe of meeting the conditions for a reduction. Opinions are divided. Some representatives expected the target to be reached sooner than expected, while others preferred to wait for incoming economic data. Considering the decrease of the bond yields, the S&P 500 and Nasdaq indices closed at record highs on Wednesday. Technology, commodity, and industrial sectors were the leaders of the growth.
The European stock market closed in the green zone. Shares of mining companies and producers of sports goods were the leaders of the growth. The market was also supported by the European Commission’s forecasts of the economic growth in the euro area for the current and next year. According to a new forecast, the European economy will grow by 4.8% this year and by 4.5% next year. Also, the ECB has agreed to set a new inflation target of 2%.
Oil prices are correcting. Investors are waiting for new signs of progress in negotiations to increase production and resolve the dispute between Saudi Arabia and the UAE. But the minister of Energy of Saudi Arabia, Abdulaziz bin Salman admitted that the next meeting of the OPEC+ coalition might not take place until August. The oil market remains in a state of uncertainty for now. However, analysts of JPMorgan Chase are sure that OPEC+ countries will agree upon a monthly increase of oil production from August and count on the growth of oil prices to $80 per barrel.
The situation in the precious metals market remains unchanged. The reduction of profitability of government obligations led to the increase in gold and silver prices. The fundamental picture is now in favor of growth in prices of precious metals.
Asian stocks fell to a six-week low as the sell-off of technology companies continues amid China’s move to close a loophole for Chinese IT giants to float IPOs in the US. The Chinese government has begun drafting amendments to legislation regulating the listing of Chinese companies abroad. The amendments would allow the authorities to block Chinese companies from listing abroad even if its organization is registered outside China.
Main market quotes:
- S&P 500 (F) 4,358.13 +14.59 (+0.34%)
- Dow Jones 34,681.79 +104.42 (+0.30%)
- DAX 15,692.71 +181.33 (+1.17%)
- FTSE 100 7,151.02 +50.14 (+0.71%)
- USD Index 92.71 +0.16 (+0.18%)
Important events:
- Australia RBA Governor Philip Lowe’s Speech at 05:30 (GMT+3);
- ECB Monetary Policy Statement at 14:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- US Natural Gas Storage (w/w) at 17:30 (GMT+3);
- US Crude Oil Inventories (w/w) at 18:00 (GMT+3).
