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Fed May Raise Interest Rates If Inflation Continues To Rise

The US stock market ended Wednesday’s trading without a single dynamic. The oil and gas, technology, and financial sectors demonstrated positive dynamics. Negative dynamics were in the health care and consumer goods sectors. The Dow Jones decreased by 0.03% at the close, the S&P 500 increased by 0.23%, and the NASDAQ added 0.44%.

The number of new jobless claims in the US was 199,000; analysts expected 260,000. The estimate of the U. GDP growth was improved to 2.1% from 2% in the third quarter; a revision to 2.2% was expected. The US household income increased by 0.5% in October as compared to the previous month according to the US Department of Commerce. At the same time, Americans’ spending increased by 1.3%. Sales of new homes in the US in October increased by 0.4% over the previous month to 745,000 in annual terms.

Federal Reserve meeting minutes showed that policymakers are willing to raise interest rates if inflation continues to rise. Fed officials concluded that easing inflationary pressures may take longer than they had previously estimated.

European stock indexes were also traded without a single dynamic yesterday. Germany’s DAX decreased by 0.37%, France’s CAC 40 decreased by 0.03%, Spain’s IBEX 35 lost 0.26%. Meanwhile, the British FTSE 100 gained 0.37%, the Italian FTSE MIB jumped by 0.63%. Investors are still closely watching the situation with the spread of COVID-19 in the region. Germany said it would impose a full isolation today. Germany’s Ifo business climate fell for the fifth month in a row to 96.5 in November against expectations of 96.6. According to the national statistics office Insee, the value of the business confidence index in France increased to 109 points in November from 107 points a month earlier. Meanwhile, the number of people sickened by COVID-19 on Tuesday in France for the first time since August exceeded 30 thousand people.

Oil stabilized after the US announced an agreed release of strategic stocks with other countries, which failed to meet expectations. The focus is now on OPEC+ and how the group will respond to the move. The alliance has said that releasing reserves is an unwarranted move because of current market conditions. In addition, they suppose that OPEC+ may have to revisit plans to increase supply at its monthly meeting. OPEC+ is scheduled to meet Dec. 1-2.

New White House sanctions on Nord Stream 2 seem likely to have limited effect but will exacerbate the political problems that Europe’s supply chain faces ahead of an uncertain winter.

Asian stock indexes are growing today. Japan’s Nikkei 225 index has increased by 0.67% since the market opened, Hong Kong’s Hang Seng has added 0.24%, and Australia’s ASX 200 has added 0.11%. Meanwhile, China’s benchmark CSI 300 index has decreased by 0.41%. The growth leaders among Asian companies were Sony and Alibaba.

Main market quotes:

  • S&P 500 (F) 4,701.46 +10.76 (+0.23%)
  • Dow Jones 35,804.38 −9.42 (−0.03%)
  • DAX 15,878.39 −58.61 (−0.37%)
  • FTSE 100 7,286.32 +19.63 (0.27%)
  • USD Index 96,82 +0.33 (+0.34%)

Important events for today:

  • Germany GDP (q/q) at 09:00 (GMT+2);
  • Eurozone ECB Monetary Policy Meeting Accounts At 14:30 (GMT+2);
  • Eurozone ECB President Lagarde’s Speech at 15:30 (GMT+2);
  • UK BoE Gov Andrew Bailey’s Speech at 19:00 (GMT+2).
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