Investors are waiting for inflation data in the US and Europe

The US stock indices closed in the green zone yesterday. The Dow Jones added 0.76%, the S&P 500 increased by 0.23%, while the Nasdaq Composite technology index slightly decreased by 0.07%. On the one hand, the market was positively influenced by the investors' expectations that inflation would not accelerate and the Federal Reserve System and the US government would continue to support the economy. On the other hand, Patrick Harker, head of the Philadelphia Fed, also wants the central bank to start cutting stimulus as soon as this year. It also should be noted that statistically, September and October are weak months for the major US indices. The indices tend to drop before winter and then experience a bullish rally for Christmas.

European stock indices also closed in the green zone due to an increase in energy companies' shares amid higher electricity and oil prices. The British FTSE 100 index added 0.6%, French CAC 40 increased by 0.2%, German DAX jumped by 0.6%, Italian FTSE MIB added 0.9%, and Spanish IBEX 35 jumped by 1.4%.

Commodity prices are rising again. European gas and electricity prices have set new records, while commodity prices are on the verge of exceeding ten-year highs. This threatens faster inflation, higher consumer spending, and pressure on central banks to limit the massive stimulus measures underlying much of the rise in commodity prices. Aluminum and steel prices have also resumed growth. OPEC+ officials see higher demand for oil this year and next.

Gold prices are trading around $1800 per troy ounce. Gold has lost some ground over the past 7 days as the dollar index and US Treasury bond yields increased. Traders should not expect the precious metals prices to grow substantially till the end of the year, and gold and silver are likely to lose their prices sharply if the "tapering" is announced.

Asian stock indices showed different dynamics yesterday. Australia's ASX200 index decreased by 0.31%, China's CSI300 blue-chip index decreased by 0.2%, but Tokyo's Nikkei 225 added 0.72%. Hong Kong Hang Seng Index and Chinese CSI300 have already lost 1.21% and 1.51%, respectively, since today’s opening. Alibaba Group Holding decreased by 1.6% yesterday. The Chinese authorities intend to split the Alipay payment service, which has more than 1 billion users. Beijing demands to separate Huabei and Jiebe online lending services into an independent business, attract outside shareholders, and create a separate application for these operations.

There is a new Delta outbreak in southeastern China. In just four days, 102 cases were reported in three cities in Fujian province with a population of 5 million. This is not much for the density of this region, but local authorities have already taken restrictive measures.

The head of the Reserve Bank of Australia (RBA), Philip Lowe, said that restrictions due to the coronavirus would cause a sharp decline in the economy this quarter but expressed confidence that activity would quickly recover after removing restrictions in the next quarter. Also, Philip Lowe confirmed that interest rates would remain low until 2024.

Main market quotes:

S&P 500 (F) 4,468.73 +10.15 (+0.23%)

Dow Jones 34,869.63 +261.91 (+0.76%)

DAX 15,701.42 +91.61 (+0.59%)

FTSE 100 7,068.43 +39.23 (+0.56%)

USD Index 92.62 −0.02 (−0.02%)

• – Australia RBA Governor Philip Lowe’s Speech at 05:45 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Core Consumer Price Index (m/m) at 15:30 (GMT+3).

by JMarkets, 2021.09.14

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.