Investors focus on inflation data in Europe and FOMC minutes

US retail sales decreased by 1.1% in July, while the core retail sales index decreased by 0.4%. Both indicators did not meet economists’ expectations, but the dollar index increased by 0.54% despite that. The political instability in Afghanistan also increased the demand for US currency. According to Fed Chairman Jerome Powell, the central bank does not know how the outbreak of the Delta strain might affect the economy, so the central bank is just watching the situation. At the same time, major US stock indices decreased yesterday due to declines in the technology, financial, and consumer cyclical sectors. Dow Jones decreased by 0.79%, S&P 500 index fell 0.71%, NASDAQ index lost 0.93%. General Motors stock decreased by 2.5% after Warren Buffett's Berkshire Hathaway announced it was cutting its stake in the company. Sharp declines in auto sales in July also contributed to declines in Ford and Tesla stocks.

Pfizer and BioNTech SE submitted an application to US regulators to approve a third booster dose of the vaccine, which has higher levels of neutralizing antibodies against the original virus and against Beta and Delta variants. Pharma companies are confident that revaccination within a year after the second vaccine can help keep protection from COVID-19.

European stock indices traded without a single dynamic. Investors became less optimistic about Europe's economic growth prospects, despite GDP growth and active vaccination. The UK unemployment rate fell from 4.8% to 4.7%, and the number of employees in British companies approached pre-pandemic levels. Europe and the UK will report on the inflation rate today. This is important data that central banks consider when planning their monetary policy.

Oil demonstrates the decline for the fourth day in a row. The prospect of reducing the demand for travel and new restrictions in Asian countries continue to put pressure on quotes.

Chinese authorities continue to put pressure on the country's IT sector. Yesterday, the State Administration for Market Regulation (SAMR) presented a new draft of rules aimed at stopping unfair competition on the Internet. In turn, the head of the US Securities and Exchange Commission (SEC) appealed to investors with a warning of risks related to investments in Chinese companies in the US stock exchanges. The trade war between the two countries continues. There is a possible crisis associated with delays of shipping supplies from China ahead. China's newspaper, People's Daily, which is considered the mouthpiece of China's Communist Party, hints at the need to stimulate the economy. If China announces an easing of monetary policy, Asian stock indices could begin a bullish trend. The Reserve Bank of New Zealand announced it would keep its monetary policy unchanged, leaving the interest rate at 0.25%. Analysts had expected that New Zealand would become the first advanced economy to raise interest rates.

Main market quotes:

S&P 500 (F) 4,448.08 -31.63 (-0.71%)

Dow Jones 35,343.28 -282.12 (-0.79%)

DAX 15,921.95 -3.78 (-0.02%)

FTSE 100 7,181.11 +27.13 (+0.38%)

USD Index 93.12 +0.50 (+0.54%)

• – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
• – New Zealand RBNZ Monetary Policy Statement at 05:00 (GMT+3);
• – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
• – New Zealand RBNZ Press Conference at 06:00 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Crude Oil Inventories (w/w) at 17:30 (GMT+3);
• – US FOMC Meeting Minutes at 21:00 (GMT+3).

by JustMarkets, 2021.08.18

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.