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Jackson Hole Symposium Shifts To An Online Format, Dollar Index Bounces From 9-Month High

Major US stock indices closed Friday in green territory. The S&P 500 index increased by 0.8%, the Dow Jones index increased by 0.65%, and the Nasdaq added 1.2%. NVIDIA, MSFT, and CSCO stock prices made new all-time highs. But that did little to make up for the week’s losses. By the end of the week, the Dow and S&P 500 decreased by 1.1% and 0.6%, respectively, and the Nasdaq technology index fell by 0.7%. The main event of the coming week will be the annual symposium of the world’s central banks’ heads in Jackson Hole, where signals concerning the plans of the Federal Reserve’s monetary policy are expected. On the one hand, last week, the FOMC minutes showed that the Fed was not planning to cut the QE program until September 22. On the other hand, hedge funds and well-known private investors are reducing the shares of companies in their portfolios, so the probability that Mr. Powell will announce the start of monetary policy tightening still exists. It also became known that the growing number of COVID-19 cases prompted the Federal Reserve to shift its annual symposium in Jackson Hole to an online format.

US Treasury Secretary Janet Yellen told senior White House advisers that she supports the reappointment of Jerome Powell as chairman of the US Federal Reserve, whose term expires in February. The White House has not yet commented on this issue, but the Biden administration is inclined to nominate another candidate according to preliminary information.

European stock indexes closed in the green zone on Friday. The British FTSE 100 increased by 0.4%, the French CAC 40 gained 0.3%, the German DAX added 0.3%, and the Spanish IBEX 35 added 0.15%. By the end of the week, the FTSE 100 fell by 1.8%, the DAX index decreased by 1.1%, the CAC 40 lost 3.9%, and the IBEX 35 lost 0.9%. Shares of European automakers fell after Volkswagen said it would cut production at its main plant due to a chip shortage. Analysts estimate that the global semiconductor shortage will lead to a 6.3-7.1 million reduction in car output this year, and supply chain disruptions caused by the COVID-19 pandemic will affect the auto industry next year as well.

WTI crude oil prices decreased by 2.55% on Friday, while Brent crude lost 2.15%. By the end of last week, WTI decreased by 8.9%, and Brent decreased by 7.7%. The oil market is still under the pressure of the global spread of Delta and, as a consequence, a decrease in demand for fuel.

The gold situation remains unchanged. As long as the Fed maintains a soft monetary policy, quotes of precious metals will rise. But any hints on the reduction of the QE program will cause a sharp fall in these instruments. A lot will depend on the economic symposium results in Jackson Hole later this week.

The shares of Chinese IT giants are going down as China has passed a new data privacy law that is considered one of the strictest in the world in terms of requirements for companies that collect user data. Another reason is the ongoing trade war between the US and China. Container prices between the US and China have skyrocketed, which will undoubtedly be reflected in higher prices for goods from China. At the same time, the Chinese authorities were able to contain the wave of the Delta strain: no new cases of infection were detected in the country on August 23. As a result, Asian stock indexes slightly increased at the opening on Monday. However, the situation with the epidemic in other Asian countries is only getting worse.

Main market quotes:

  • S&P 500 (F) 4,441.67 +35.87 (+0.81%)
  • Dow Jones 35,120.08 +225.96 (+0.65%)
  • DAX 15,808.04 +42.23 (+0.27%)
  • FTSE 100 7,087.90 +29.04 (+0.41%)
  • USD Index 93.46 -0.11 (-0.12%)

Important events for today:

  • Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
  • Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
  • Singapore Consumer Price Index (m/m) at 08:00 (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 Services PMI (m/m) at 11:00 (GMT+3);
  • UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
  • UK Services PMI (m/m) at 11:30 (GMT+3);
  • US Manufacturing PMI (m/m) at 16:45 (GMT+3);
  • US Services PMI (m/m) at 16:45 (GMT+3);
  • US Existing Home Sales (m/m) at 17:00 (GMT+3).
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