The deficit on energy resources increases ahead of the winter season

US stock indices ended yesterday's trading in the negative area. Over the month, the S&P 500 decreased by 4.8%, the Dow Jones lost 4.3%, and the Nasdaq lost 5.3%. The S&P 500 and Nasdaq indices have had their worst month-to-month performance since March 2020. Why is the stock market going down? While investors expect the Federal Reserve to cut its stimulus, the concerns about slowing economic growth, rising inflation, supply chain problems, the global energy crisis, and regulatory risks emanating from China are also increasing. The end of the month in the stock market was the time of increased volatility, hedging, and economic concerns. As a result, investors and hedge funds are rebalancing their investment portfolios. It should also be noted that the stock market saw record money outflows last week. However, many investment banks and hedge funds are still urging investors to buy all drawdowns.

Some Congress members have raised the Fed’s issue of ending the QE program as a condition for a budget deal.

Boeing received a $23.8 billion contract from the US Department of Defense.

European stock indices also closed lower yesterday. The British FTSE 100 decreased by 0.31%, German DAX lost 0.68%, French CAC 40 decreased by 0.62%, Italian FTSE MIB and Spanish IBEX 35 lost 0.21% and 0.94% respectively.

According to Bloomberg Economics, Eurozone inflation data for September is likely to be pessimistic. Inflation is expected to be clearly above the European Central Bank's 2% target in all major economies in the region. German inflation accelerated to 4.1% in September from 3.9% in August, the highest rate since 1993. In September, inflation in France and Italy also accelerated as households in the Eurozone's two largest economies faced a jump in energy prices. Unemployment in the Eurozone fell to 7.5% in August. European natural gas and electricity prices jumped to record highs, signaling that supply shortages will only worsen before the winter.

Oil is rising as potential demand growth caused by the global energy crisis counteracts the impact of the crisis on the overall economy. According to preliminary data, OPEC+ is considering throwing more oil on the market at next week's meeting because of a strong deficit.

Gold is on the way to its biggest monthly loss since June, as the prospect of stimulus cuts pressures the precious metals. Yesterday, gold and silver increased sharply amid a temporary drop in US government bond yields.

Manufacturing activity in Asia rebounded in September after some countries eased restrictions associated with the Covid-19 virus. In Asia, all resources for the electricity generation, including gas, coal, and water) are in short supply, and the situation doesn’t seem to improve anytime soon. Asian stock indices are falling due to increasing inflation concerns. Australian stocks decreased more than 2%, South Korea's Kospi is down 1.5%, and the MSCI Asia Pacific Index decreased by 1.1%. Japan's Nikkei 225 index lost more than 2%.

Japan's next prime minister, Fumio Kishida, may have no choice but to sell most government bonds worth hundreds of billions of dollars to finance the pandemic package.

Main market quotes:

S&P 500 (F) 4,307.54 −51.92 (−1.19%)

Dow Jones 33,843.92 −546.80 (−1.59%)

DAX 15,260.69 −104.58 (−0.68%)

FTSE 100 7,086.42 −21.74 (−0.31%)

USD Index 94.25 -0.08 (-0.09%)

• – Japan Unemployment Rate (m/m) at 02:30 (GMT+3);
• – Japan Tankan Manufacturing Index (m/m) at 02:50 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Consumer Price index (m/m) at 12:00 (GMT+3);
• – US PCE price index (m/m) at 15:30 (GMT+3);
• – Canada GDP (m/m) at 15:30 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

by JMarkets, 2021.10.01

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.