The US stock indices closed with strong growth yesterday. The rebound was observed in almost all sectors except Healthcare and Consumer Defensive. Separately, it should be noted about the confidence increase in the companies of the tourist industry. By the end of the trading day, the Dow Jones index (US30) gained 1.6%, S&P 500 (US500) added 1.78%, while Nasdaq (US100) jumped by 2.4%.
Micron shares led to the gain among chipmakers, jumping by 10.5%. The company reported better-than-forecast quarterly results. The earnings forecast for the current quarter also beats Wall Street expectations. The companies’ positive reports help ease some of the investors’ concerns about broader supply chain constraints in the face of high inflation.
On Tuesday, US President Joe Biden said that he does not intend to impose a national quarantine, emphasizing testing and vaccinations. Starting next month, the White House will make 500 million tests available to everyone for free. Military doctors and nurses may be involved to help overcrowded hospitals cope with the winter surge.
European stock indices also closed in the green area yesterday. The British FTSE 100 (UK100), German DAX (DE30), and French CAC 40 (FR40) increased by 1.4%. Spanish IBEX 35 (ES35) jumped by 1.8%. The market was supported by reducing concerns about the Omicron variant, as future vaccines will be effective against the new strain. The price of gas in Europe for the first time exceeded $2,000.
Meanwhile, the price of natural gas futures, on the contrary, has been decreasing for three weeks. However, the reason for the rise in gas prices in Europe is due to the stoppage of Gazprom’s key pipeline, as well as a drop in temperatures in the region. The UK GDP increased by 1.1% in Q3; a 1.3% growth was expected.
The Turkish lira strengthened sharply amid government support measures to protect local currency savings from exchange rate fluctuations. On Tuesday, Turkey’s central bank said it would support the conversion of foreign-currency deposit accounts into lira deposits. Resident individuals who already have a foreign currency deposit account will be eligible for benefits if they convert their accounts into Turkish lira term deposit accounts. At the moment, more than half of the savings of local residents are in foreign currencies and gold due to the loss of confidence in the lira after a sharp depreciation. Over the past two days, the Turkish currency increased by 30%.
Crude oil prices also rose yesterday as risk appetite returned to the markets, helped by easing concerns over the Omicron strain. Crude oil inventories data will be released today. Analysts believe the government data will show a 2.6 million barrel drop in crude oil inventories from the previous week. The supply shortage may cause oil prices to rise further.
The Asian stock indices supported the overall growth dynamics yesterday. At the same time, the indices continued to rise at the opening of trading today. Japan’s Nikkei stock index (JP225) increased by 1.6% yesterday. News of Monday’s enactment of an extra budget to fund the Japanese government’s economic stimulus package aimed at mitigating the effects of Covid-19 also seemed to support the domestic stock market. Hong Kong’s Hang Seng Index (HK5) increased by 0.2%. Hong Kong’s consumer price index rose to 1.8% on an annualized basis. Compared to the previous month, the increase was 0.1%. Hong Hao, a head of research at BOCOM International, said that Chinese investors were more focused on potential supply chain problems caused by COVID outbreaks than on inflation indicators. One major Chinese port was closed as a result of the Omicron outbreak yesterday.
Main market quotes:
- S&P 500 (F) (US500) 4,649.23 +81.21 (+1.78%)
- Dow Jones (US30) 35,492.70 +560.54 (+1.60%)
- DAX (DE40) 15,447.44 +207.77 (+1.36%)
- FTSE 100 (UK100) 7,297.41 +99.38 (+1.38%)
- USD Index 96.59 +0.10 (+0.10%)
Important events for today:
- Japan BoJ Monetary Policy Statement at 01:50 (GMT+2);
- UK GDP (q/q) at 09:00 (GMT+2);
- US GDP (q/q) at 15:30 (GMT+2);
- US CB Consumer Confidence (m/m) at 17:00 (GMT+2);
- US Existing Home Sales (m/m) at 17:00 (GMT+2);
- US Crude Oil Inventories (m/m) at 17:30 (GMT+2).
