Tue, Sep 27, 2022 @ 03:37 GMT
HomeContributorsFundamental AnalysisThe US Labor Market Recovery Is Slowing Down. The ECB Did Not...

The US Labor Market Recovery Is Slowing Down. The ECB Did Not Make Any Changes

Yesterday, the data from the US Labor Department showed that initial jobless claims increased by 51,000 to 419,000 last week, the highest level within the last 2 months. But the news didn’t affect the stock indices that much, as corporate earnings of reporting companies are pushing the indices up. But many analysts are sure that good company reports can’t support the stock market all the time, and a severe correction may happen in the near future. August and September are statistically weak months for the indices, so according to Ryan Detrick, chief market strategist at LPL Financial, the next two months could be a serious test for the bullish trend, considering that the Federal Reserve will hold a monetary policy meeting next month. Any signs of QE cut could send the market into a 10% correction. In its turn, the websites of several major companies (Delta Air Lines, British Airways, Capital One, Vanguard, United Parcel Service, LastPass, AT&T, Costco) shut down due to a large-scale failure yesterday. The reasons for the failure will be specified later.

European indices closed Thursday’s trading in the green zone. The ECB expectedly kept the benchmark interest rate on loans at zero and the rate on deposits at -0.5%. The rate on marginal loans was left at 0.25%. These rates will remain in place until Eurozone inflation remains steadily above the 2% target. Pandemic Emergency Purchase Program (PEPP) asset purchases will continue at a significantly higher pace this quarter, which will have a negative impact on the European currency.

Oil prices returned to $70 a barrel. On Wednesday, the US crude supply data released by the EIA showed that inventories increased by just over 2 million barrels, ending an eight-week streak of declines. The EIA data also showed a 121.00 barrel drop in gasoline inventories, indicating that fuel demand remains strong during the summer season.

The US Treasury yields declined. Gold has an inverse correlation to government bond yields, so this picture plays in favor of rising gold and silver prices.

The Asian stock market closed yesterday without a single trend. The prospects for rapid recovery of Asian countries are reduced due to the low level of vaccination and the rapid spread of the Delta strain. New Zealand suspends its agreement with Australia to travel without any quarantine restrictions for at least eight weeks. Toyota announced new production shutdowns due to a shortage of components shipped from Southeast Asia. Analysts expect business activity in Asia to decline in the coming months.

Main market quotes:

  • S&P 500 (F) 4,367.48 +8.79 (+0.20%)
  • Dow Jones 34,823.35 +25.35 (+0.07%)
  • DAX 15,514.54 +92.04 (+0.60%)
  • FTSE 100 6,968.30 -29.98 (-0.43%)
  • USD Index 92.86 +0.11 (+0.12%)

Important events for today:

  • UK Retail Sales (m/m) at 09:30 (GMT+3);
  • France Manufacturing PMI (m/m) at 10:15 (GMT+3);
  • Germany Manufacturing PMI (m/m) at 10:30 (GMT+3);
  • Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
  • Eurozone Service PMI (m/m) at 11:00 (GMT+3);
  • UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • UK Service PMI (m/m) at 11:30 (GMT+3);
  • UK Composite PMI (m/m) at 11:30 (GMT+3);
  • Canada Retail Sales (m/m) at 15:30 (GMT+3);
  • US Manufacturing PMI (m/m) at 16:45 (GMT+3);
  • US Service PMI (m/m) at 16:45 (GMT+3).


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