The US stock market ended Thursday trading in the green zone. The Dow Jones increased by 1.48%, the S∓P 500 added 1.21%, and the Nasdaq Composite added 1.04%. Thursday’s gains in the Dow Jones and S&P 500 were the highest in the last two months. With a high probability, investors can look forward to a slight increase in stock quotes until November. Still, with the beginning of the “tapering” (reduction of the QE program), the markets will correct much stronger. Hedge fund analysts expect a deeper correction till December, and then there will be an increase ahead of the “Christmas rally.”
The US Secretary of Commerce said that the Biden administration’s lifting of international travel restrictions in early November would significantly boost the US economy.
The US House of Representatives passed the legislative initiative on new sanctions against the Nord Stream 2 pipeline yesterday as part of the defense budget for the next fiscal year (starting October 1).
European stock indices traded without a single trend yesterday. Investors were assessing the results of the meetings of the US Federal Reserve System (Fed), Bank of England, and the Swiss Central Bank. By the end of the day, German DAX increased by 0.9%, French CAC 40 added 1%, Spanish IBEX 35 added 0.8%, Italian FTSE MIB jumped by 1.4%. Meanwhile, the British FTSE 100 index decreased by 0.07%. The Bank of England kept the interest rate at 0.1% and left the volume of government bond purchases at GBP 875 billion. On the back of this news, the British pound strengthened. But the index of business activity in the manufacturing and services sectors has declined over the last month, indicating that the recovery is slowing down. Also, BP, the largest oil company, told the British government that some of its gas stations in the UK had run out of gasoline and diesel fuel due to supply chain problems. The Swiss central bank kept its interest rate at -0.75%.
The US oil inventories are at their lowest since 2018, while European stocks remain below average for this time of year. Vitol Group, the world’s largest independent oil trader, expects global oil demand to rise by another half-million barrels a day this winter as the energy crisis associated with gas forces a drive to consume other fuels. Vitol Group analysts predict oil prices to rise to $80 a barrel.
Natural gas prices are skyrocketing as seasonally low inventories in Europe, rising demand in China, and supply constraints from Russia lead to a conflict for raw materials for power generation before winter.
The People’s Bank of China has injected 460 billion yuan ($71 billion) into the banking system over the past five business days, including 70 billion yuan on Friday. It helps ensure sufficient liquidity during the Evergrande crisis. Due to tighter regulation by the authorities, home sales values in China fell by 20% year on year. It is expected that the decline in the real estate market will also affect emerging markets, affecting global demand for commodities. Fitch Ratings lowered its forecast on China amid Evergrande uncertainty and said it expects China’s economy to grow at 8.1% this year, down from a previous estimate of 8.4%. The central bank of the Philippines kept its key interest rate unchanged as the economy recovered steadily.
Main market quotes:
- S&P 500 (F) 4,448.98 +53.34 (+1.21%)
- Dow Jones 34,764.82 +506.50 (+1.48%)
- DAX 15,643.97 +137.23 (+0.88%)
- FTSE 100 7,078.35 −5.02 (−0.071%)
- USD Index 93.10 −0.37 (−0.39%)
Important events for today:
- Japan National Core Consumer Price Index (m/m) at 02:30 (GMT+3);
- German Ifo Business Climate (m/m) at 11:00 (GMT+3);
- US New Homes Sales (m/m) at 17:00 (GMT+3);
- US Fed Chair Jerome Powell’s Speech at 17:00 (GMT+3).
