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Traders’ Main Focus Is Still On High Inflaion

Yesterday, the US stock market closed with a slight decline when the dollar index hit a 16-month high. Investors are buying the USD because of a sharp rise in US inflation. This rise confuted the Federal Reserve’s view that price pressures would be temporary and strengthened speculation that interest rates would be raised earlier than previously expected. The University of Michigan reported late last week that the Consumer Confidence Index fell to its lowest level in a decade in November (to 66.8 points from 71.7 points a month earlier). This came as a surprise to analysts who had expected an increase to 72.4 points. The Dow Jones and Nasdaq indices decreased by 0.04% yesterday, while the Standard&Poor’s 500 closed near where it had opened.

According to a Washington Post and ABC poll, a majority of US citizens (70%) were negative about the current state of the US economy.

In contrast to US indices, European stock indices increased yesterday, with some indices breaking price records. The Stoxx Europe 600, a composite index of the largest companies in the region, gained 0.35% and hit a new record. Since the beginning of the current year the index has grown by more than 22%. Germany’s DAX jumped by 0.34% and hit a new high, France’s CAC 40 added 0.5% and also hit its new high, Britain’s FTSE 100 increased by 0.05%. At the same time, Italy’s FTSE MIB added 0.5% and Spain’s IBEX increased by 0.2%. Deutsche Bank is calling on the ECB to tighten its monetary policy as inflation rises. Tomorrow new data on the consumer price index in Europe will be published. The growth in inflation may be a reason for the ECB to consider reducing its bond-buying program at the next ECB meeting.

Despite the rise in disease across Europe, the UK is not going to introduce restrictions at the moment. Several cases of the new Covid-19 strain have been detected in France, raising concerns amid increasing cases of infectious disease across Europe.

British Prime Minister Boris Johnson said yesterday that the Russian pipeline to Europe represents a threat to stability and added that Europe will soon face the choice of buying Russian hydrocarbons or protecting Ukraine, a matter of peace and stability.

The UK Antitrust Authority intends to conduct an in-depth investigation into Nvidia’s planned $40 billion acquisition of ARM Holdings.

Airbus says it can’t increase A350 production fast enough to meet demand and predicts supply constraints for another 3 years.

Oman’s oil minister expects OPEC+ to extend its decision to increase production by 400,000 bpd in December. The US Senator Schumer calls for using strategic oil reserves to lower prices. However, OPEC+ representatives believe that such a move would not significantly reduce prices.

The price of gas in Europe jumped to $961 after the failure of Gazprom on gas transit reservation for December through Poland.

Yesterday, Asian stocks hit a two-week high as investors welcomed a video meeting between US President Joe Biden and Chinese leader Xi Jinping that helped push the Chinese yuan to a five-month high. MSCI Asia-Pacific’s broadest stock index outside Japan increased by 0.27%, to its highest level since Oct. 27, while Tokyo’s Nikkei index added 0.4%. Today Asia-Pacific stock indices are trading flat, with Hong Kong’s Hang Seng showing strong gains.

Industrial production in China has grown by 10.9% from the beginning of the year. Unemployment did not rise in China in October, 11.33 million jobs have been created since January. China’s economy has maintained a steady recovery in October.

Chinese authorities have suspended the issuance of licenses for new video games amid restrictions on playing time for children and controls on game content. The last permit was issued in July 2021.

The S&P/ASX 200 index in Australia fell by 0.67% after the Reserve Bank of Australia governor spoke out against calls for a rate hike next year. Released on Tuesday, minutes of the central bank of Australia’s November monetary policy meeting showed that the RBA expected the rate to remain unchanged until 2024.

Main market quotes:

  • S&P 500 (F) 4,682.80 −0.050 (−0.001%)
  • Dow Jones 36,087.45 −12.86 (−0.04%)
  • DAX 16,148.64 +54.57 (+0.34%)
  • FTSE 100 7,351.86 +3.95 (+0.054%)
  • USD Index 95.51 +0.38 (+0.40%)

Important events for today:

  • Australia RBA Meeting Minutes at 02:30 (GMT+2);
  • Australia RBA Governor Philip Lowe’s Speech at 04:30 (GMT+2);
  • UK Average Earnings Index (m/m) at 09:00 (GMT+2);
  • UK Claimant Count Change (m/m) at 09:00 (GMT+2);
  • UK Unemployment Rate (m/m) at 09:00 (GMT+2);
  • Eurozone GDP (q/q) at 12:00 (GMT+2);
  • US Retail Sales (m/m) at 15:30 (GMT+2);
  • US Industrial Production (m/m) at 16:15 (GMT+2);
  • ECB President Lagarde’s Speech at 18:10 (GMT+2);
  • US FOMC Member Barkin speaks at 19:00 (GMT+2).


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