Last week on Friday, the University of Michigan released its Consumer Confidence Index. The index decreased from 81.2 to 70.2, indicating growing fears about the dynamics of the economic recovery. As a result, the dollar index fell sharply. However, the US stock market ended Friday’s trading higher due to strengthening health care, utilities, and telecommunications sectors. The Dow Jones increased by 0.04% to a historic high, the S&P 500 added 0.16%, and the NASDAQ increased by 0.04%. The gainers among the S&P 500 index companies were the eBay shares (+7.45%), which reached its historical maximum, as well as AMD (+3.80%). The number of securities that fell in price (1760) exceeded the number of securities, which closed on the rise (1467). By the end of the week, the Dow Jones increased by 0.9%, the S&P 500 jumped by 0.7%, while the Nasdaq decreased by 0.1%. The tech sector is still under pressure due to the Biden administration’s intentions to raise taxes on tech giants. This week investors will monitor the FOMC minutes as well as the speech of the Fed chair Jerome Powell.
On Friday, European stock indices closed in the green zone on the back of good corporate reports. By the end of the week, the Stoxx Europe 600 composite index jumped by 1.25%, the British FTSE 100 added 1.3%, the German DAX increased by 1.4%, the French CAC 40 gained 1.2%, the Spanish IBEX 35 added 1.4%, and the Italian FTSE MIB increased by 0.4%. Corporate financial results for the second quarter of 2021 give hope for a quick recovery in European economies and offset concerns about the spread of the Delta strain. This week, Eurozone will report on inflation, a good indicator for predicting future ECB policy. For now, the ECB is keeping its monetary policy soft and is not going to change it.
Oil prices dropped on Friday and continued to decline on Monday as the rapid spread of a Delta strain began to have a negative impact on the Chinese economy. There is an increase in the activity of shale companies in the US. The number of existing oil drilling rigs in the United States increased by 10 units last week.
Gold increased on Friday as the dollar index declined and the US Treasury yields fell. As long as the Fed keeps its monetary policy soft, gold and silver prices will rise slowly. But any rumors about the possible reduction of the QE program will cause a wave of sales.
The Asian stock market is still under pressure. In China, the growth of industrial production and retail sales slowed in July, indicating the negative impact of the Delta strain on business activity. In countries such as Thailand, Vietnam, and the Philippines, the number of new coronavirus cases is near record levels. Japan’s GDP increased by 0.3% q/q, and industrial production increased by 0.3% in the last month. But the recovery is much weaker than in other advanced economies. Many analysts expect growth to remain modest in the current quarter, and there could be a slowdown in the third quarter because of the Olympic games.
Main market quotes:
- S&P 500 (F) 4,468.00 +7.17 (+0.16%)
- Dow Jones 35,515.38 +15.53 (+0.04%)
- DAX 15,977.44 +39.93 (+0.25%)
- FTSE 100 7,218.71 +25.48 (+0.35%)
- USD Index 92.52 -0.51 (-0.55%)
Important events for today:
- Japan GDP (q/q) at 02:50 (GMT+3);
- China Industrial Production (m/m) at 05:00 (GMT+3);
- Japan Industrial Production (m/m) at 07:30 (GMT+3).
