Inflation Growth In The UK Slows Down

Fundamental analysis of Forex market

The US stock market closed yesterday in the green zone. At the close of the New York Stock Exchange, the Dow Jones index increased by 0.56% to a one-month high, the S&P 500 index added 0.74%, and the NASDAQ index increased by 0.71%. The market growth came mostly from strength in the health care, utilities, and oil and gas sectors.

Fed member Waller said yesterday that the US economy is on the way for healthy job growth in the 4th quarter of 2021. The economy returned 85% of the jobs lost during the pandemic recession, not counting the 2 million retirees. Waller also believes that the US Central Bank no longer needs to stimulate the economy. This means that it is very likely that the Fed will officially announce the beginning of the QE program reduction in early November.

The USA President Joe Biden assures that he will not raise taxes for people who earn less than $400 thousand a year.

According to preliminary information, Enanta’s antiviral drug against COVID-19 is more effective than Merck’s.

British scientists have announced the spread of a more infectious variant of the coronavirus than the delta strain. The new variant AY.4.2 could be 10-15% more virulent than the delta strain. This variant could be the most contagious since the virus began to spread. In Israel, the first cases of the new sub-variant have already been confirmed.

European stock indexes were on the rise yesterday. German DAX increased by 0.27%, British FTSE 100 added 0.19%, Italian FTSE MIB and Spanish IBEX 35 added 0.25% and 0.67%, respectively. The only exception was the French CAC 40, which decreased by 0.05%. The UK consumer price index was 3.1% (previous 3.2%), indicating that inflation in the UK has stopped rising. Core inflation, which excludes food and energy prices, also declined from 3.1% to 2.9%. But in Germany, the producer price index, which shows the inflation rate among businesses, continued to rise.

According to the American Petroleum Institute (API), the weekly stocks of crude oil amounted to 3.294 MIL (from 5.213 MIL the previous week). India wants OPEC+ to increase production to contain the rise in oil prices.

Physical copper traders are firmly bullish on the fundamental outlook for the metal despite the impending macroeconomic headwinds. Copper prices are growing rapidly.

Gold prices are under selling pressure ahead of the start of the Fed’s reduction of monetary policy stimulus (MP). As QE cuts, government bond yields rise sharply, which has an inverse correlation with gold, so there is no fundamental reason for gold to rise at the moment. Analysts expect gold to fall below $1700 an ounce.

Asian stock markets continued yesterday’s gains. Japan’s Nikkei 225 index gained 0.8%, Australia’s ASX 200 added 0.9%, but China’s China A50 slightly decreased on negative macro data from China. The volume of production in China in real estate fell by 1.6% compared with last year, and the volume of production in the construction industry decreased by 1.8%.

Today’s most anticipated earnings releases are Tesla, Verizon, IBM, Abbott, Nextera Energy, ASML, Biogen.

Main market quotes:

  • S&P 500 (F) 4,519.63 +33.17 (+0.74%)
  • Dow Jones 35,457.31 +198.70 (+0.56%)
  • DAX 15,515.83 +41.36 (+0.27%)
  • FTSE 100 7,217.53 +13.70 (+0.19%)
  • USD Index 93.77 −0.18 (−0.19%)

Important events for today:

  • China Loan Prime Rate at 04:30 (GMT+3);
  • UK Consumer Price Index (m/m) at 09:00 (GMT+3);
  • Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
  • Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
  • US Crude Oil Reserves (w/w) at 17:30 (GMT+3).