American employers struggle to find workers. As a result, the number of vacancies in the US reached a record high of 10.9 million. The news was positive for the dollar index and negative for the major stock indices. At the close of the stock market, the Dow Jones index decreased by 0.20%, the S&P 500 decreased by 0.13%, and the NASDAQ technology index lost 0.57%. Mostly the negative dynamics were observed in the oil and gas and technology sectors.
John Williams, the representative of the US Federal Reserve Bank of New York, said that the labor market needs significant progress to achieve the maximum goal of the Central Bank. However, he added that it might be appropriate for the Federal Reserve to start cutting the QE program later this year if the economy continues to improve.
Eventually, it is becoming clear that growth in the US economy is slowing. There are plans to raise corporate taxes and reduce the quantitative easing program. Investors should not expect further stock market gains this year and should focus on closing positions and rebalancing their portfolios.
European stock indices also closed in the red zone yesterday. The British FTSE 100 decreased by 0.75%, French CAC 40 lost 0.85%, German DAX dropped 1.5%, Italian FTSE MIB and Spanish IBEX 35 lost 0.75% and 0.6% respectively. All indices finished the day at their lowest levels in the last two to four weeks. Significant declines were also posted by the pharmaceutical stocks, including Novartis (-1.8%), AstraZeneca (-1.8%), and Sanofi (-2.5%). JP Morgan downgraded green energy companies Siemens Gamesa Renewable Energy S.A. and Siemens Energy AG. As a result, the companies’ shares lost 8.6% and 8.1%, respectively.
Today, the European Central Bank will publish its interest rate decision and announce further monetary policy plans. It is more likely that nothing will change, but amid high inflation in Europe, there are talks about possible stimulus cuts.
The US Department of Energy slightly lowered its forecast for the price of Brent crude oil for the current year from $68.71 to $68.61 per barrel. OPEC+ crude oil production increase and reduction of global oil demand in response to COVID-19 spread have a negative impact on the growth of quotes.
Against the backdrop of a rising dollar index and rising US Treasury bond yields, the price of gold and silver declined yesterday. Given the fact that the QE program is likely to be reduced this year, investors should not expect a significant increase in precious metal prices.
Japan is going to extend the state of emergency in Tokyo and other regions until the end of this month to curb the outbreak of the virus and prevent hospital overflow. Major Asian indices are still under pressure from the outbreak of the virus in the region and also because investors fear that major central banks will soon begin to cut the QE program, which will lead to a large correction in the markets. At the end of yesterday’s trading, Japan’s Nikkei 225 index decreased by 0.38%, Australia’s ASX 200 index lost 1.01%, Korea’s KOSPI decreased by 0.74%, and Hong Kong’s Hang Seng index fell by 1.17%, with tech companies declining the most.
Main market quotes:
- S&P 500 (F) 4,514.07 −5.96 (−0.13%)
- Dow Jones 35,031.07 −68.93 (−0.20%)
- DAX 15,610.28 −232.81 (−1.47%)
- FTSE 100 7,095.53 −53.84 (−0.75%)
- USD Index 92.71 +0.20 (+0.21%)
Important events for today:
- China Consumer Price Index (m/m) at 04:30 (GMT+3);
- China Producer Price Index (m/m) at 04:30 (GMT+3);
- Eurozone Marginal Lending Facility (m/m) at 14:45 (GMT+3);
- Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+3);
- Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+3);
- Eurozone ECB Press Conference (m/m) 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);
- US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
- Canada BOC Gov Macklem’s Speech at 19:00 (GMT+3).
