The US stock market closed without a single trend yesterday. The Dow Jones index increased by 0.26%, the S&P 500 added 0.16%, and the NASDAQ lost 0.24%. The dollar increased to its highest level in almost a year despite a possible US default and the prospect of more budget cuts than originally planned. Though, according to preliminary information, Democratic leaders have reached an agreement on a vote on the debt limit. Republicans will no longer block the vote.
Fed Chairman Jerome Powell said in his speech yesterday that the US was getting closer to cutting asset purchases. Analysts expect the official announcement to be made at the next Fed meeting in early November.
European stock indices increased yesterday. The British FTSE 100 added 1.1% to a three-week high, German DAX and French CAC 40 added 0.8% each, Italian FTSE MIB increased by 0.6%, Spanish IBEX 35 jumped by 1.3%. AstraZeneca (+4.2%) was one of the leaders in the growth of quotes on Wednesday. The pharmaceutical company announced the purchase of a stake in Caelum Biosciences Inc. for 150 million euros. Also, the quotes of the Italian UniCredit bank (+3.7%) and the Spanish Banco de Sabadell S.A. (+3.7%) significantly increased.
The balance sheet of the European Central Bank reached another record, showing that Europe keeps printing money to the max. Total assets grew by 28.6 billion. The ECB balance is >80% of Eurozone GDP against 37.3% for the Fed, 38.8% for the Bank of England, and 133.7% for the Bank of Japan. ECB President Christine Lagarde says that the EU will return to pre-pandemic levels by the end of the year, and supply chain problems should disappear in the first half of 2022.
Despite an increase of more than 500,000 barrels a day in oil production, the recovery from Hurricane Ida continues to lag as US oil production remains lower by 400,000 barrels a day.
As the dollar index and US government bond yields rise, gold and silver prices are declining. Fundamentally, there is no reason to buy these precious metals now.
Since winter is coming and natural gas prices are at record highs, economies around the world are competing for limited coal supplies. China’s energy crisis has led to a surge in shipping costs as the nation is buying up coal to power its economy this winter. China’s coal shortage means higher prices for the rest of the world. China, the world’s top coal consumer, is in dire need of more supplies and is willing to pay any price. Such a move threatens to leave less fuel for energy-starved competitors. Industrial activity in China declined in September for the first time since the pandemic began last year. It is a sign of the damage that the power shortages are doing to the economy.
Japan’s Nikkei index lost 0.36% over the day after Japan’s ruling party chose Fumio Kishida as its new leader and prime minister. Fumio Kishida supports a conservative policy.
Main market quotes:
- S&P 500 (F) 4,359.46 +6.83 (+0.16%)
- Dow Jones 34,390.72 +90.73 (+0.26%)
- DAX 15,365.27 +116.71 (+0.77%)
- FTSE 100 7,108.16 +80.06 (+1.14%)
- USD Index 94.40 +0.63 (+0.67%)
Important events for today:
- Japan Industrial Production (m/m) at 02:50 (GMT+3);
- Japan Retail Sales (m/m) at 02:50 (GMT+3);
- China Manufacturing PMI (m/m) at 04:00 (GMT+3);
- UK GDP (q/q) at 09:00 (GMT+3);
- Japan BoJ Gov Haruhiko Kuroda’s Speech at 10:10 (GMT+3);
- German Unemployment Rate (m/m) at 10:55 (GMT+3);
- Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- US GDP (q/q) at 15:30 (GMT+3);
- US Chicago PMI (m/m) at 16:45 (GMT+3);
- US FOMC Member Williams’s Speech at 17:00 (GMT+3);
- US Natural Gas Storage (w/w) at 17:30 (GMT+3);
- US FOMC Member Bostic’s Speech at 18:00 (GMT+3).
