Jerome Powell’s speech became the main event of the last week following the annual Symposium in Jackson Hole. Mr. Powell said that as long as the labor market remains substantially sluggish and the pandemic continues, tightening the monetary policy could be a premature mistake. In other words, the soft monetary policy remains the same. The Fed Chairman also added that the spread of the Delta strain poses a short-term risk to economic growth and said that the Fed remains optimistic about economic recovery. Nothing was said about the timing of the end of the QE program. Discussions are still ongoing, and this issue will depend on economic and health care risks. However, Powell noted that if inflation remains high, the Fed will undoubtedly take action to reduce price pressures. After it became known that the QE program was not planned to be cut in the nearest future, the main US stock indexes sharply jumped and closed the day at the maximums. At the close of the trading session, the Dow Jones increased by 0.69%, the S&P 500 index increased by 0.88%, and the NASDAQ index jumped by 1.23%. The rally continues.
On the other hand, the market indicator of billionaire investor Warren Buffett, who compares the stock market valuation with the size of the US economy, reached 205%, which indicates a huge overvaluation of stocks. This indicator has accurately predicted the impending collapse several times. It reached a record high during the dot-com bubble and was also high before the 2008 global financial crisis. And both times it remained below 150%.
During the testing of the distance on one charge, Lucid Air’s first electric car traveled 445 miles and outperformed its Tesla Model S competitor (405 miles). At the same time, Lucid Air representatives said its Air Dream model can reach 517 miles on a single charge. But the cost of the car from Lucid Air is a little bit higher – $169,000. It looks like Tesla has a serious competitor.
European stock indices finished last week in the green zone. At the end of the week, British FTSE 100 added 0.8%, German DAX added 0.2%, French CAC 40 increased by 0.2%, Italian FTSE MIB increased by 0.2%, and Spanish IBEX remained the same. The consumer confidence index in France decreased by 1 point in August compared to the previous month. Germany’s import prices jumped by 15% in July compared to the same month last year and 2.2% in the previous month. European inflation data is expected this week.
Oil prices fell and rebounded from a 3-week high amid a powerful hurricane in the Mexican bay. Gasoline prices in the US increased by more than 3% as a power outage shut down the Persian Gulf Coast refineries. Analytical firms still expect oil prices to rise by the end of the year.
Gold and silver prices jumped on Friday as the Federal Reserve maintained its soft monetary policy. Until the Federal Reserve announces cutting its QE program, precious metal prices tend to rise.
The broadest index of Asia-Pacific shares outside of Japan, MSCI, jumped to a two-week high on Friday, Japan’s Nikkei 225 added 0.46%, Australia’s ASX200 added 0.2%, Korea’s KOSPI increased by 0.25%, but China’s blue-chip index CSI300 lost 0.26%. Japan is exploring the possibility of mixing AstraZeneca’s COVID-19 vaccine with vaccines developed by other drugmakers in an effort to speed up vaccine introduction. Japan is struggling with the worst wave of infections caused by the Delta version, and for the first time this month, the number of new daily infections exceeded 25,000. In Japan, 54% of the population is vaccinated with at least one dose, and 43% are fully vaccinated. Japanese prime ministerial candidate Fumio Kishida is calling for a huge stimulus package in the amount of several tens of trillions of yen to maintain the pace of economic recovery.
Main market quotes:
- S&P 500 (F) 4,509.37 +39.37 (+0.88%)
- Dow Jones 35,455.80 +242.68 (+0.69%)
- DAX 15,851.75 +58.13 (+0.37%)
- FTSE 100 7,148.01 +23.03 (+0.32%)
- USD Index 92.68 -0.38 (-0.41%)
Important events for today:
- German Consumer Price Index (m/m) at 15:00 (GMT+3);
- Pending Home Sales (m/m) at 17:00 (GMT+3).
