The US stock market traded yesterday without a single dynamic. At the close of the stock market, the Dow Jones index decreased by 0.10%, the S&P 500 index increased by 0.34%, and the NASDAQ index added 0.84%. The technology sector and the consumer cyclical sector were the leaders. The health care and utility sectors were the fallers. The US industrial production declined as the ongoing global shortage of semiconductors reduced auto production, further evidence that supply constraints hamper economic growth.
Guggenheim Global Chief Investment Officer Scott Minerd said yesterday that the stock market could jump more than 10% over the next year as risks from inflation or rising interest rates are limited. For this reason, individual investors and funds are buying into falling stocks, despite the obvious macroeconomic problems.
A new insider trading scandal is brewing in the United States. According to SEC reports, Federal Reserve Chairman Jerome Powell sold between $1 million and $5 million of stocks from his personal account on October 1, 2020. This sale occurred just before the Dow Jones Index declined significantly. Recall that three other top Fed officials faced heavy criticism for making stock trades during the pandemic. Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren were suspended due to the disclosure of their trades. Fed Vice Chairman Richard Clarida has also been criticized for stock trading. Other trades are currently under investigation by the Fed’s inspector general and the SEC.
Data from the Federal Reserve show that the wealthiest 10% of Americans own 89% of all stocks in the United States.
European stock indices closed yesterday in the red zone. German DAX decreased by 0.72%, British FTSE 100 lost 0.42%, French CAC 40 fell by 0.81%, Italian FTSE MIB and Spanish IBEX 35 lost 0.83% and 0.68%, respectively. The market is under pressure from high inflation in the region, the energy crisis, supply chain problems, rising commodity prices, and declining real estate market activity.
The number of British energy companies that have gone bankrupt since the beginning of September amid soaring natural gas prices has reached 13. As the UK Gas and Electricity Markets Authority reported, Goto Energy, Pure Planet, Colorado Energy, and Daligas left the market last week.
According to a Deutsche Bank survey, many investors expect the US Federal Reserve and the European Central Bank to keep a softer monetary policy for much longer.
German digital bank N26 raised $900 million in a new funding round valued at $9 billion, thereby overtaking the country’s second-largest bank, Commerzbank, in terms of capitalization.
Oil prices fell slightly yesterday due to a slowdown in economic growth in China and weak US industrial production data. According to Bloomberg, OPEC+ countries produced 15% less oil in September than planned initially. If oil prices do not fall, the union could face political pressure. The White House continues to press OPEC members to solve the oil supply problem. Some traders are betting that Brent crude will hit a record $200 a barrel by December 2022, according to QuikStrike.
Asian stock indexes mostly rose on Tuesday. Japan’s Nikkei 225 added 0.68%, the China A50 increased by 1.14%, while the Australian ASX 200 fell by 0.08%. Asian investors are following the US colleagues and are buying back declines in stocks, despite many macroeconomic problems in the region. Electricity problems in China appear to be escalating as coal prices rise again to record highs. The latest data showed that fuel supplies fell in September, heightening fears that domestic production may not be able to meet the growing electricity demand.
Main market quotes:
- S&P 500 (F) 4,486.46 +15.09 (+0.34%)
- Dow Jones 35,258.61 −36.15 (−0.10%)
- DAX 15,474.47 −112.89 (−0.72%)
- FTSE 100 7,203.83 −30.20 (−0.42%)
- USD Index 93.97 +0.03 (+0.03%)
Important events for today:
- Australia RBA Meeting Minutes (m/m) at 03:30 (GMT+3);
- UK BoE Gov Bailey Speaks at 15:05 (GMT+3);
- US Building Permits (m/m) at 15:30 (GMT+3);
- US FOMC Member Daly Speaks at 18:00 (GMT+3);
- US FOMC Member Bostic Speaks at 21:50 (GMT+3).
