Global financial markets are under pressure amid rising cases of Delta variant in China

The US stock market ended Monday's trading without a single dynamic. The Dow Jones index decreased by 0.28%, the S&P 500 index decreased by 0.19%, and the NASDAQ technology index increased by 0.06% at the close of the stock market. The number of stocks that fell in price exceeded the number that closed on the plus side (1,755 vs. 1,436). Investors did not like the data from the US manufacturing sector, as it raised concerns about further economic recovery. Positive reports from companies do not help indexes strengthen. More and more economists are inclined to the fact that at the annual symposium in Jackson Hole on August 27, the Federal Reserve representatives can announce the cutting of stimulus, which will cause a large sell-off in the stock market.

The US Republican Party released an investigation which states that all possible evidence they have collected points to a SARS-CoV-2 type coronavirus due to a leak. There is growing public confidence that the US should punish China for failing to warn the international community about the virus outbreak quickly and does not want to cooperate with the investigation.

European stock indexes grew on Monday. Germany's DAX increased by 0.15%, Britain's FTSE 100 added 0.70%, France's CAC 40 and Spain's IBEX 35 jumped by 1%. The European market was supported by good statistical data from Germany and the UK, as well as strong company reports. The British economy is gaining momentum. Almost all restrictions have been lifted in the country, and the vaccination rate among adults is 90% (1 dose). The International Monetary Fund (IMF) will allocate $650 billion from its reserves (the record amount of the fund's allocation of history) for the economic recovery of member countries. $275 billion will go to developing countries, while $375 billion will go to emerging market countries.

Oil prices fell more than 2.5% on Monday. Fears about the rapid spread of the Delta strain in Asian countries, including China, are still growing in the oil market and are likely to slow the global economic recovery and weaken global demand for raw materials. Many analysts think China's weak business activity statistics in the manufacturing sector result from the Delta's spreading.

The situation in the precious metals market remains unchanged. Recently, gold shows very weak dynamics and has been flat most of the time. Analysts expect the dollar index to rise in the coming days, which may cause a temporary decline in the price of gold and silver.

Asian stock indices are falling amid a rise of Delta strain in Asian countries, especially in China, which has restrained the spread of the virus for a long time. Investors have realized that China's economy is not invulnerable. In China, many factories and logistics firms are closing, hotels are also closing, and mass testing measures are rolled out. The Reserve Bank of Australia kept its interest rate unchanged and also left its quantitative easing program unchanged, despite the growing economic threat posed by restrictions to fight the pandemic coronavirus. RBA Governor Philip Lowe says that the economic outlook for the coming months is uncertain and depends on the development of the disease situation. Economists expect GDP to fall in September because of the impact of the restrictions.

Main market quotes:

S&P 500 (F) 4,387.16 -8.10 (-0.18%)

Dow Jones 34,838.16 -97.31 (-0.28%)

DAX 15,568.73 +24.34 (+0.16%)

FTSE 100 7,081.72 +49.42 (+0.70%)

USD Index 92.07 -0.10 (-0.11%)

• – Australia RBA Interest Rate Decision at 07:30 (GMT+3);
• – Australia RBA Rate Statement at 07:30 (GMT+3).

by JMarkets, 2021.08.03

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.