Last week, investors’ main focus was on US nonfarm payrolls data. The labor market statistics were disappointing. The US economy added only 194,000 jobs in September (490,000 expected). But despite such data, analysts are still confident that the Fed will start to reduce the quantitative easing (QE) program in November. Otherwise, the surge in inflation may just stop economic growth, which is already slowing down, and the decline in consumer expectations indicates that the US economy is in recession now. Treasury bond yields increased on Friday, with 10-year and 30-year notes reaching their highest levels since June, suggesting that funds and investors have concluded that the Federal Reserve’s schedule of asset purchases will probably not change, despite the weak labor market statistics. By Friday’s close, the S&P 500 index decreased by 0.19% (for the week +0.98%), the Dow Jones index decreased by 0.03% (for the week +1.26%), and the Nasdaq index lost 0.51% (for the week +0.6%).
White House officials say China produces more steel per month than the US does in a year and spends three times as much on infrastructure as the US, so a bipartisan infrastructure deal would allow investment in modernizing the country’s physical infrastructure.
Southwest Airlines canceled more than 1,000 flights (27% of its schedule) on Sunday because of air traffic control problems and bad weather.
European stock indices traded flat on Friday. The British FTSE 100 increased by 0.25% (+0.97% for the week), the German DAX decreased by 0.29% (+0.96% for the week), the French CAC 40 decreased by 0.61% (+1.16% for the week), the Spanish IBEX 35 lost 0.09% (+1.76% for the week), and Italian FTSE MIB added 0.23% on Friday and finished the week at +2.27%, the best performance among all the stock indices in Europe.
In addition to problems with truck drivers, Britain also faces a pilot shortage, which can prevent the resumption of the travel industry after hundreds of airline crew retired early or changed careers during the pandemic. Britain is working on supporting energy-intensive industries hit by soaring gas prices, Business Minister Kwasi Kwarteng said Sunday, calling the situation critical. Manufacturers of steel, glass, ceramics, paper, and other industries said they could be forced to halt production if the government does nothing about energy prices.
WTI crude oil in the US has reached $80 a barrel for the first time since November 2014. JPMorgan Bank believes that the continued rise in oil prices will not end the bull market in the US, and the market can see oil prices rising to $130-150 a barrel and the 10-year US Treasury bond yields rising to 2.50%.
Amid rising US government bond yields, gold and silver are under selling pressure as these metals are inversely correlated with the dollar index and government bond yields.
Asian stock markets mostly rose at the end of last week. Japan’s Nikkei 225 added 1.34% (-3.43% for the week), China’s CSI 300 increased by 1.31% (+1.21% for the week), Australia’s ASX 200 added 0.87% (+1.87% for the week), and only South Korea’s KOSPI decreased by 0.11% (-3.27% for the week). Exports to China have declined for the first time since August 2020. Over the past 12 months, only 103.9 billion euros worth of goods and services have been exported to China. This may be the first sign that China’s economy is slowing down. Chinese real estate developer Evergrande has already missed 2 weeks of obligation payments and is due to pay nearly $150 million in coupons this week.
Malaysia lifted interstate and international travel restrictions for residents fully vaccinated against COVID-19 as the country reached its goal of vaccinating 90% of the adult population.
Main market quotes:
- S&P 500 (F) 4,391.34 −8.42 (−0.19%)
- Dow Jones 34,746.25 −8.69 (−0.03%)
- DAX 15,206.13 −44.73 (−0.29%)
- FTSE 100 7,095.55 +17.51 (+0.25%)
- USD Index 94.10 −0.11 (−0.12%)
