After months of work, US senators finally presented a large bipartisan infrastructure development plan of $1 trillion (investing in roads, railroads, bridges, ports, high-speed Internet, electric car charging stations, water pipe replacement, and other infrastructure) that will certainly impact economic growth and labor market. It is a five-year plan. But on the other hand, Democrats want to offset the social spendings with tax increases for corporations and wealthy Americans earning more than $400,000 a year.
With Beijing tightening requirements for Chinese companies planning to list abroad, the Securities and Exchange Commission (SEC) has begun requiring additional disclosures from Chinese companies.
The US stock market ended Friday’s trading with a drop. At the end of trading on the New York Stock Exchange, Dow Jones decreased by 0.42%, S&P 500 index decreased by 0.54%, and NASDAQ lost 0.71%. About 90% of the last&300 reports in the US beat analysts’ estimates. Earnings are expected to reach 89.8% in the second quarter compared to expectations of 65.4% in early July. But the indices are no longer showing the strong gains seen in previous months. More and more analysts are starting to lean towards the option that many hedge funds are using the current report period to cut their positions on the eve of the impending correction.
European stock indexes closed in the red zone on Friday. The Stoxx Europe 600 composite index of the region’s largest companies fell by 0.45%, the British FTSE 100 index decreased by 0.65%, the German DAX lost 0.61%, and the French CAC 40 decreased by 0.32%. Europe’s inflation rate increased to 2.2% in annual terms (previous 1.9%, ECB target 2.0%), but second-quarter GDP and unemployment data were better than economists’ expectations. The rise in annual inflation is mainly triggered by higher energy prices. The EU unemployment rate fell from 8% to 7.7%, while GDP increased by 1.9%.
Oil prices corrected slightly on Friday and Monday due to negative manufacturing PMI data from China, the world’s second largest oil consumer. It should be noted that OPEC+ countries are increasing oil production on a daily basis, which is driving oil prices lower as demand begins to catch up with supply. In other news, the United States and Britain said Sunday that they believe Iran attacked an Israeli-operated oil tanker off the coast of Oman on Thursday and promised to respond to the event.
Despite the rise in precious metal prices over the past month, it is impossible to single out any of the top four precious metals (gold, silver, platinum, and palladium). As long as the Fed keeps its monetary policy soft, fundamentally, precious metal prices will rise gradually. But any hint of QE program cutting may trigger a strong sell-off. But before August 27, there is a high probability that there will be no change.
Asian businesses had a tough period in July as rising raw material costs and a new wave of coronavirus infections are seriously slowing down the region’s recovery. Manufacturing activity picked up in Japan and South Korea, but companies suffered supply chain disruptions and a lack of raw materials, which led to an increase in costs. However, the growth of industrial activity in July has fallen sharply in China. Housing prices in Australia continue to grow despite the restrictions. The International Monetary Fund lowered its growth forecast for developing Asian countries for this year.
Main market quotes:
- S&P 500 (F) 4,395.26 -23.89 (-0.54%)
- Dow Jones 34,935.47 -149.06 (-0.42%)
- DAX 15,544.39 -96.08 (-0.61%)
- FTSE 100 7,032.30 -46.12 (-0.65%)
- USD Index 92.09 +0.23 (+0.25%)
Important events for today:
- China Manufacturing PMI (m/m) at 04:45 (GMT+3);
- Germany Manufacturing PMI (m/m) at 10:55 (GMT+3);
- Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
- UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
- US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3).
