The Federal Reserve leaves monetary policy unchanged

At yesterday’s press conference, Jerome Powell said that the Fed would wait for strong labor market numbers in the coming months before cutting the QE program. Currently, the Fed is not cutting QE. The interest rate remains unchanged. Also, the Fed chair said that the inflation rate could be higher and steady, but it would return to the 2% target in the following year. The situation in the financial markets will remain the same at least until the end of August. Subsequently, the dollar index decreased by 0.19% to a two-week low.

The US stock market finished the day without a single dynamic. The Dow Jones index decreased by 0.36%, the Nasdaq index increased by 0.70%, and the S&P 500 index remained at the same level. Boeing shares were the growth leaders among the Dow Jones index components, adding 4.16% by the end of the day. The company reported its first quarterly profit in almost two years (the previous 6 quarters were unprofitable). This proves the growth of orders for commercial planes, which is a sign of recovery of air transportation after the pandemic. At the same time, the orders of Boeing 737 MAX also increased in recent months, after the regulators gave permission to liner flights, as Boeing made fixes to the flight control system that caused crashes in 2018 and 2019.

European stock indexes closed in the green zone yesterday. Airbus says that it plans to produce a new cargo plane based on its A350 passenger jet version. Also, the world's largest commercial airliner maker sharply raised its delivery and profit forecasts for the next year, which means orders grow. Starting next week, England is opening its borders to vaccinated tourists from the EU and US without quarantine, which is a long-awaited stimulus for travel companies and airlines.

Germany will report on the inflation rate and the status of the labor market today.

US crude oil inventories declined again last week, pushing WTI crude prices slightly higher. The Delta strain is still putting pressure on the oil market, but analysts believe the pressure will ease significantly in a few weeks. However, oil demand in the US and Europe is starting to fall.

Gold prices increased yesterday as the Fed's soft monetary policy remains unchanged. As long as the Fed doesn't start reducing asset purchases, gold and silver prices will grow.

China's securities regulator held a meeting with executives from the world's top investment banks to calm financial markets regarding Chinese companies. Chinese officials say short-term market panic is not a long-term threat, and Beijing remains supportive of domestic companies seeking foreign listings, and regulators will soon present additional measures to further open the capital market to foreign companies. Considering this news, China's blue-chip index increased by 1.4%, Shanghai Composite index increased by 1.1%. Chinese companies, which are traded in the US stock market, also showed growth.

The quarantine is being prolonged again in Sydney. Analysts believe that such isolation measures will undoubtedly have a negative impact on the national economy in the coming months. The Reserve Bank of Australia (RBA) is likely to postpone reducing assets scheduled for September.

Main market quotes:

S&P 500 (F) 4,400.64 -0.82 (-0.02%)

Dow Jones 34,930.93 -127.59 (-0.36%)

DAX 15,570.36 +51.23 (+0.33%)

FTSE 100 7,016.63 +20.55 (+0.29%)

USD Index 92.26 -0.17 (-0.19%)

• – Germany Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Germany Consumer Price Index (m/m) at 15:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

by JMarkets, 2021.07.29

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.