Yesterday, the S&P 500 and Nasdaq closed at record highs. The Dow Jones index increased by 0.09%, the S&P 500 added 0.15%, and the Nasdaq jumped by 0.52%. Investors are waiting for Friday’s speech by Fed Chairman Jerome Powell. The July FOMC minutes suggest that the Fed could start cutting QE by the end of the year. However, there is a high probability that Mr. Powell may refrain from talking about cutting QE because of the spread of Delta and the fact that Fed officials aren’t unanimous about this issue.
New home sales in the US increased in July after a three-month decline, but housing market dynamics are slowing since the rise in housing prices against the background of a limited proposal displaces new buyers from the market.
Major European stock indices were trading flat yesterday despite positive statistics from Germany. Germany’s GDP increased by 1.6% in the second quarter. On an annual basis, Europe’s largest economy grew 9.4%, leaving economic activity 3.3% below the pre-crisis level. The European economy is now recovering at a slightly faster pace than the US economy. The German DAX index increased by 0.3%, and the British FTSE 100 added 0.2% yesterday. At the same time, France’s CAC 40 decreased by 0.3%, Italy’s FTSE MIB decreased by 0.1%, and Spain’s IBEX lost 0.2%.
Investors are now buying gold, silver, and other commodities as they do not expect Jerome Powell to announce this week that the Fed will cut the QE program. The Fed’s soft monetary policy contributes to an upward trend in commodity markets.
Oil prices have been rising for the 2nd session in a row. On the one hand, the growth of the quotes is affected by the fact that the US regulatory authorities have fully approved a vaccine against COVID-19. It will reduce the spread of Delta and lead to a resumption of demand for fuel. On the other hand, the epidemiological situation in Asian countries (except China) remains very difficult, which clouds the prospects for a quick demand recovery.
China’s central bank increased short-term injections into the financial system to calm market worries about the reduction in liquidity. As a result, Chinese companies sharply jumped yesterday. Malaysia’s consumer price index, which is responsible for inflation, increased by 2.2% in July compared to a year earlier. The number of cases of COVID-19 infection in Sydney reached the highest record on Wednesday. Officials are calling for more vaccinations to stop the wave of hospitalization. In Japan, the situation with the spread of the Delta strain is worsening. According to the Ministry of Health, the country reported 21,500 new daily cases of COVID-19 and 42 deaths on Tuesday. Eight more prefectures were added to the state of emergency, bringing the total number of prefectures under quarantine to 21. The state of emergency will last until September 12.
Main market quotes:
- S&P 500 (F) 4,486.23 +6.70 (+0.15%)
- Dow Jones 35,366.26 +30.55 (+0.09%)
- DAX 15,905.85 +53.06 (+0.33%)
- FTSE 100 7,125.78 +16.76 (+0.24%)
- USD Index 92.88 -0.08 (-0.08%)
Important events for today:
- German Ifo Business Climate (m/m) at 11:00 (GMT+3);
- US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
- US Crude Oil Reserves (w/w) at 17:30 (GMT+3).
