The U.S. stock market ended Friday’s trading with growth due to the strengthening of technology and industrial sectors. By the close of the stock market, Dow Jones added 0.50% (-0.87% for the week), S&P 500 increased by 0.72% (-0.40% for the week), technology index NASDAQ added 1.00% (+0.87% for the week). But despite a good growth rate on Friday, all three indices decreased by the end of the week.
The Fed’s balance sheet hit a new high on Friday, $8.58 trillion, but is rising at a slower pace as the Fed began reducing its QE program. The Fed’s balance sheet is now 37.4 % of US GDP.
On the other hand, large investors and hedge funds still expect the major indices to rise. According to preliminary data, global equity funds saw their largest inflows for the last 10 weeks. Investors bought $11.61 billion of stocks, their largest net purchase since Sept. 1. The US equity funds received $6.29 billion in inflows, European funds received $2.59 billion, while Asian funds received net inflows of $1.72 billion.
Treasury Secretary Janet Yellen said controlling the Covid-19 virus in the US is a key to lower inflation. Yellen expects inflation to fall by the second half of 2022.
The White House’s top economic adviser said that President Joe Biden’s $1.75 trillion economic bill, which is stuck in Congress, will counter inflation for Americans by reducing the cost of child care, health care, and housing.
European stock indexes traded mixed on Friday. British FTSE 100 index decreased by 0.49% (+0.60% for the week), German DAX added 0.07% (+0.33% for the week), Spanish IBEX 35 decreased by 0.13% (-0.56% for the week), Italian FTSE MIB added 0.36% (-0.15% for the week), and French CAC 40 increased by 0.45% and become a growth leader with +0.71% for the week. Inflationary pressures in Germany continue to update records. Wholesale prices in Germany increased to 15.2% in October, the highest level since March 1974. But hedge fund analysts believe inflation in the Eurozone will remain at the same level. The inflation data in Europe will be released Wednesday this week.
The WHO has called Europe the epicenter of Covid-19 infections one more time. In many countries, the statistics of sick people have increased ten times compared to summer and early fall figures. Most of the severely ill patients are unvaccinated. Starting from November 15, Austrian authorities will impose a 10-day lockdown for citizens who have not been vaccinated against coronavirus. The Danish government is also ready to introduce new restrictions. Denmark is one of the few European countries to cancel almost all Covid measures this September.
The number of new cases of Covid-19 infection in Germany has reached a record high: more than 50 thousand in the past 24 hours. Today, about 16 million people in Germany aged 12 years and above remain unvaccinated. The exception is Spain, which has the highest rate of fully vaccinated population in all of Europe, 89% (in Britain it is 74%), and the lowest rate of infection: 63 cases per 100,000 population.
At the commodities market, futures on orange juice (+9.25%), coffee (+8.97%), wheat (+6.59%), silver (+5.19%), platinum (+5.1%), corn (+4.43%), palladium (+4.31%), soybeans (+3.13%), gold (+2.8%), and copper (+2.54%) showed the biggest gains by the end of the week. Natural gas futures (-13.37%), lumber (-5.73%) and cotton (-1.6%) showed the biggest declines.
Rising oil and natural gas prices are boosting not only black gold but also shale oil production. The US shale oil production is expected to reach 8.68 million barrels per day in December, the highest since March 2020.
Asian stocks traded flat on Friday. Japan’s Nikkei increased by 1.13% (-0.43% for the week), Australia’s ASX 200 gained 0.83% on Friday (-0.19% for the week), China’s benchmark CSI 300 index decreased by 0.31% (+0.98% for the week), while Hong Kong’s Hang Seng added 0.32% (+2.36% for the week), the biggest gainer among Asian indices. Late last week, the Chinese real estate developer Evergrande was able to avoid defaulting at the very last moment, which made investors be optimistic. In addition, analysts at Goldman Sachs have also become more optimistic about Chinese stocks. Meanwhile, GDP growth in Hong Kong slowed to 5.4% in Q3.
The Japanese government is preparing a bill to expand funding for local semiconductor manufacturing for Japanese and foreign companies. The bill would allow the government to check the country of origin of any imported computer equipment and block the installation of Chinese-made computer devices for national security purposes.
The Turkish lira hit another anti-record against the dollar on Friday, staying around 10 lira per 1 US dollar, as Turkey’s central bank reduced its interest rate again. The Turkish lira has been currently the world’s worst-performing currency in 2021, with -25.6% since the beginning of the year.
Main market quotes:
- S&P 500 (F) 4,682.85 +33.58 (+0.72%)
- Dow Jones 36,100.31 +179.08 (+0.50%)
- DAX 16,094.07 +10.96 (+0.07%)
- FTSE 100 7,347.91 −36.27 (−0.49%)
- USD Index 95.12 +0.24 (+0.25%)
Important events for today:
- Japan GDP (q/q) at 01:50 (GMT+2);
- China Retail Sales (m/m) at 04:00 (GMT+2);
- China Industrial Production (m/m) at 04:00 (GMT+2);
- China Unemployment Rate (m/m) at 04:00 (GMT+2);
- Japan Industrial Production (m/m) at 06:30 (GMT+2).
