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Today, All Investors’ Attention Is Focused On The Jerome Powel’s Speech On The Results Of The Symposium In Jackson Hole

The number of initial jobless claims in the US slightly increased to 353,000 from 349,000 last week. But these figures are still at pre-crisis levels, indicating a stable labor market situation. US GDP year-on-year increased to 6.6% (previous 6.5%), although this is below economists’ expectations of 6.7%. The head of the Fed, Jerome Powell, will give a speech today following the symposium in Jackson Hole. This verbal intervention may increase the volatility in the financial markets. If nothing will be mentioned about the reduction of the QE program or if Mr. Powell will indicate that it is too early to speak about it and better labor market numbers are needed, the dollar index will rally down, and stock indices will jump. And vice versa, if Mr. Powell says that the QE program reduction is scheduled to start this year, in this case, the dollar index will jump sharply, while the stock indices will go down. Analysts believe that the central bank will seek to begin reducing monthly bond purchases this year to avoid having to catch up with the market later and risk more aggressive steps to curb inflation.

Investors were cautious in the stock markets yesterday, with some investors starting to trim their portfolios, which caused a short-term decline in indices. As a result, the S&P 500 decreased by 0.58%, the Dow Jones lost 0.54%, and the Nasdaq fell by 0.6%.

Thursday’s US military losses were the first in Afghanistan since February 2020 and represented the deadliest day for US troops in a decade. Some critics blamed Joe Biden for the hasty evacuation that threatened the lives of Americans in Afghanistan providing security at the Kabul airport.

Ahead of Mr. Powell’s speech, European stock indexes also decreased yesterday. The Stoxx Europe 600 composite index of the region’s largest companies lost 0.32%. The British FTSE 100 index decreased by 0.35%, German DAX lost 0.16%, French CAC 40 fell by 0.42%. Spanish IBEX 35 and Italian FTSE MIB fell by 0.94% and 0.76%, respectively. Deutsche Bank shares decreased by 2.3% on news of an inspection of the bank’s unit by the US Securities and Exchange Commission (SEC) on information that the bank exaggerated its use of ESG criteria in investing. The EU is considering reintroducing restrictions for US tourists visiting European countries. On the back of this news, stocks of European tourist companies fell yesterday.

Oil rising in price and finishing the week with a steady increase. The Chinese authorities were able to contain the wave of delta strain, and analysts at Goldman Sachs and UBS still expect oil prices to rise until the end of 2021, as the supply on the market will be insufficient.

Gold added 0.15% yesterday, hitting $1,793.60 per troy ounce. Gold and silver price dynamics are highly dependent on the dynamics of the dollar index and US Treasury bond yields. If the Fed keeps its soft monetary policy, gold prices will continue to rise. On the contrary, if the Fed announces cuts to its QE program this year, gold could see large sales.

Retail sales in Australia fell in July due to the spread of the delta strain. The New Zealand dollar slightly decreased after the country’s prime minister announced a quarantine in Auckland, the country’s largest city, which is likely to remain in place for another two weeks.

Main market quotes:

  • S&P 500 (F) 4,470.00 -26.19 (-0.58%)
  • Dow Jones 35,213.12 -192.38 (-0.54%)
  • DAX 15,793.62 -67.04 (-0.42%)
  • FTSE 100 7,124.98 -25.14 (-0.35%)
  • USD Index 93.05 +0.22 (+0.24%)

Important events for today:

  • Jackson Hole Symposium (Day 2);
  • Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • US PCE price index (m/m) at 15:30 (GMT+3);
  • US Fed Chair Jerome Powell’s speech at 17:00 (GMT+3);
  • US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).
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