The US stock market closed in the green zone yesterday. The financial, industrial, and oil and gas sectors were the growth leaders. The S&P 500 increased by 0.22%, the Dow Jones added 0.11%, and the Nasdaq added 0.15%. At the same time, the S&P 500 and Nasdaq indices renewed their price records.
The annual meeting of the Federal Reserve will begin in Jackson Hole today. Analysts believe that the Fed may postpone cutting the QE program because of the global rise of Delta cases. Goldman Sachs experts have raised the odds of a stimulus cut announcement in November to 45% from its previous forecast of 25% and lowered the December chance from 55% to 35%. But a lot will depend on whether the cutting happens this year or next. If the program is cut this year, investors can forget about the stock market’s growth until the end of the year. On the other hand, short interest is at its lowest level in 20 years. The same level was before the collapse of tech companies in 2000. So there is still a possibility that the market will go into a deep correction. Everyone is waiting for Jerome Powell’s speech on the results of the symposium on Friday.
The US House of Representatives has approved a $3.5 trillion budget program. Democrats plan to spend trillions of dollars on a number of social programs but are having difficulty getting these proposals through Congress because the party does not have a substantial majority. Republicans strongly oppose the plans, citing the high cost and unsustainable financial situation of the country.
European stock indices were mostly up yesterday. The British FTSE 100 increased by 0.34%, the French CAC 40 added 0.18%, the Spanish IBEX 35 increased by 0.32%, and the Italian FTSE MIB added 0.12%. Meanwhile, the German DAX lost 0.28%. Germany’s Influential business climate index from the IFO institute has been decreasing for the second month in a row. The reasons for the drop are problems with the supply chain of goods to production and fears of new restrictions due to the increase in Delta cases.
Oil prices have added about 10% this week. But now, the situation in the oil market remains uncertain. On the one hand, oil and gasoline inventories are declining (US commercial oil inventories declined by 2.98 million barrels last week; previously published data of the American Petroleum Institute showed a decline of 1.6 million barrels), which increases the supply deficit in the market. On the other hand, demand for fuel is not growing due to the spread of the Delta strain.
Stock indices of Asia-Pacific countries are decreasing on Thursday. Investors are waiting for greater clarity regarding regulatory reforms that China holds in relation to technological companies. In turn, the Bank of Korea raised its key interest rate by 25 basis points to 0.75% per year. South Korea has become the first major country in Asia to begin to gradually abandon the stimulative monetary policy. South Korea’s Kospi index decreased by 0.5% at the opening session. Japan’s Nikkei 225 index didn’t change. China’s Shanghai Composite decreased by 0.5%, and Hong Kong’s Hang Seng lost 1.3%.
Main market quotes:
- S&P 500 (F) 4,496.19 +9.96 (+0.22%)
- Dow Jones 35,405.50 +39.24 (+0.11%)
- DAX 15,860.66 −45.19 (−0.28%)
- FTSE 100 7,150.12 +24.34 (+0.34%)
- USD Index 92.82 −0.08 (-0.08%)
Important events for today:
- Jackson Hole Symposium (Day 1);
- Release of ECB’s Account of Monetary Policy Meeting at 14:30 (GMT+3);
- US GDP (q/q) at 15:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- US Natural Gas Storage (w/w) at 17:30 (GMT+3).
