The US stock market closed in different directions yesterday. Industrials, utilities, and real estate sectors showed negative dynamics. At the close of the stock market, Dow Jones decreased by 0.76%, S&P 500 lost 0.34%, but NASDAQ added 0.07%. Walt Disney Company (+1.85%) was the biggest gainer among the components of the Dow Jones index. Moderna shares jumped by 4.72%. Apple increased to a historic high (+1.55%). In the US, unemployment payments will end soon, which could have a significant impact on economic growth. Also, it should be noted that President Biden plans to raise corporate taxes, which will mean a drop in corporate profits. Many economists are inclined to believe that the Federal Reserve will begin cutting the QE program in November. All this consists in the “perfect storm”, which will eventually lead to a drop in major stock indices.
European stock indices closed in the red zone yesterday. The Stoxx Europe 600 composite index of the region’s largest companies decreased by 0.5%. The British FTSE 100 lost 0.5%, French CAC 40 decreased by 0.3%, German DAX decreased by 0.6%, Italian FTSE MIB lost 0.7%. The exception was the Spanish IBEX 35, which added 0.1%. Indexes of economic sentiment in European countries are declining, which indicates a slowdown in the economic recovery in the region. The UK government plans to increase the National Insurance Tax to pay for social and health care services. A growing number of business groups and analytical centers oppose this decision since due to labor shortages, such a move threatens to further undermine the prospects for economic recovery.
The situation in the oil market remains uncertain. On the one hand, the sharp decrease of Saudi Arabia’s selling prices for Asia and some European countries caused fears of a demand slowdown. On the other hand, good economic data from China and production disruptions in the US limit the decline. Analysts’ houses are still forecasting a rise in prices to $80 per barrel by the end of the year.
Gold prices dropped sharply yesterday amid a rise in the dollar index (+0.55%) and rising US Treasury yields (+1.39%). Gold prices are inversely correlated with these indicators. Pressure on prices is also triggered by concerns about the soonest reduction of the QE program, which will undoubtedly lead to a decline in precious metals prices.
China plans to open a new Beijing Stock Exchange. It was announced by the country’s leader Xi Jinping. He said that because of the reduction of opportunities for listing on American exchanges, Beijing will refocus on domestic opportunities, which will allow direct investment in promising technological companies. The news boosted shares of Chinese brokerage companies, but shares of companies on competitive exchanges declined. Many investors now fear that competition for the listing companies is inevitable.
Revised Japanese GDP growth data boosted the Nikkei index at the opening of trading on Wednesday. Most other indices opened lower. Australia’s main index ASX 200 decreased by 0.32%, China’s CSI300 blue-chip index decreased by 0.04% and Hong Kong’s Hang Seng index added 0.12%.
Main market quotes:
- S&P 500 (F) 4,520.03 −15.40 (−0.34%)
- Dow Jones 35,100.00 −269.09 (−0.76%)
- DAX 15,843.09 −89.03 (−0.56%)
- FTSE 100 7,149.37 −37.81 (−0.53%)
- USD Index 92.55 +0.51 (+0.55%)
Important events for today:
- Japan GDP (q/q) at 02:50 (GMT+3);
- Canada BoC Interest Rate Decision (m/m) at 17:00 (GMT+3);
- Canada BOC Press Conference at 17:00 (GMT+3);
- Canada Ivey PMI (m/m) at 17:00 (GMT+3);
- US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
- UK Inflation Report Hearings at 18:00 (GMT+3);
- US FOMC Member Williams’s Speech at 20:10 (GMT+3).
