Last week, investors’ attention was focused on US nonfarm payrolls data and the FOMC meeting. The Federal Reserve officially announced the reduction of the QE program. An interest rate hike is scheduled for the middle of next year. The labor market statistics were improving. The US economy added 531,000 (vs. 455 000 expected) jobs in October. The US Unemployment Rate fell to 4.6%. On the other hand, the US labor productivity fell in the third quarter, reflecting a sharp slowdown in economic growth and an increase in the number of working hours.
The US stock market ended Friday’s trading with growth. At the close of the day the Dow Jones increased by 0.56% (+1.38% for the week), the S&P 500 gained 0.37% (+1.88% for the week), and the NASDAQ technology index increased by 0.20% (+2.77% for the week). But last week’s growth leader was the Russell 2000 index, which jumped by 5.88% by the end of the week, indicating the strengthening of small-cap companies. All four indices hit new all-time highs on Friday.
Pfizer announced that their antiviral COVID-19 drug reduced the risk of hospitalization or death by 89% in an interim analysis of the EPIC-HR phase 2/3 study. The company plans to provide data to the FDA soon for approval for emergency use of the drug. Already more than 50 countries appealed to Pfizer for the COVID-19 medicine.
The UK will begin releasing Merck’s antiviral tablet Molnupiravir as part of a drug trial against COVID-19 later this month.
The White House says it is preparing to purchase the COVID-19 drug from both Merck and Pfizer.
European stock indices also closed the week with growth. By the end of the week, the British FTSE 100 gained 0.92%, the German DAX added 1.84%, the Spanish IBEX 35 increased by 0.7%, the Italian FTSE MIB added 2.24%, and the French CAC 40 jumped by 2.48% and became a growth leader. Eurozone industrial production unexpectedly decreased in September, indicating a long-term impact of restrictions on the supply and shortage of semiconductors.
Asian stocks fell on Friday. Japan’s Nikkei index decreased by 0.61% (+2.75% for the week), Hong Kong’s Hang Seng lost 1.41% (-1.57% for the week), China’s benchmark CSI 300 index decreased by 0.54% (-0.73% for the week), the exception was Australia’s ASX 200, which increased by 0.39% (+1.60% for the week) on Friday.
In the commodities market, sugar futures (+3.68%), natural gas (+3.63%), lumber (+3.3%), palladium (+2.46%), gold (+2.02%), and cotton (+1.95%) showed the biggest gains by the end of the week. Soybean oil futures (-3.93%), cocoa (-3.77%), soybeans (-3.64%), WTI oil (-2.87%), gasoline (-2.73%), corn (-2.73%), and orange juice (-2.72%) showed the largest drop.
Saudi Arabia and its OPEC+ allies rejected US President Joe Biden’s calls for a significant increase in production. That leaves Biden’s ability to use the US strategic reserve.
“The oil market is short of supply, it has entered a period of strong volatility, and prices will continue to rise in the near and medium-term. The emerging disagreement between OPEC and the US administration, the possible release of oil from the US strategic reserves, and the potential resumption of talks with Iran on the nuclear program will increase the volatility of oil prices in the coming weeks,” Goldman Sachs analysts said.
Gold prices unexpectedly increased last week, despite rises in both the dollar index and government bond yields, which have an inverse correlation with gold prices. Analysts are confident that the rise in gold is not supported fundamentally, so they expect gold and silver prices to decline in the coming weeks.
Main market quotes:
- S&P 500 (F) 4,697.53 +17.47 (+0.37%)
- Dow Jones 36,327.95 +203.72 (+0.56%)
- DAX 16,054.36 +24.71 (+0.15%)
- FTSE 100 7,303.96 +24.05 (+0.33%)
- USD Index 94.22 -0.13 (-0.14%)
Important events for today:
- US FOMC Member Clarida’s Speech at 16:00 (GMT+2);
- US FED Chair Powell’s Speech at 17:30 (GMT+2);
- US FOMC Member Williams’s Speech at 17:55 (GMT+2);
- UK BoE Gov Bailey’s Speech at 19:00 (GMT+2)
- US FOMC Member Bowman’s Speech at 19:00 (GMT+2);
- US FOMC Member Evans’s Speech at 20:50 (GMT+2).