At the close of trading on Friday, the Dow Jones index (US30) decreased by 1.71% (-2.75% for the week), while the S&P500 (US500) was 1.51% lower (-2.64% for the week). The NASDAQ Technology Index (US100) fell by 0.75% on Friday (-0.39% for the week). As the Fed tightened its monetary policy to tame the strongest inflation in decades, the US Treasury yields jumped to their highest level in more than a decade, causing stocks to plummet.
Markets are entering the final stretch of 2022 after a tumultuous third-quarter close Friday, driven by persistently high inflation, rising interest rates, and fears of a recession. The US stock market has now posted three consecutive quarterly declines for the S&P 500 and Nasdaq since 2008, as well as the longest quarterly decline for the Dow Jones. Analysts believe investors are likely to see increased market volatility with a downward bias in the near term as we approach the reporting season.
European stock markets mostly rallied on Friday, but almost all closed in negative territory at the end of the week. German DAX (DE30) gained 1.16% (-0.96% for the week), French CAC 40 (FR40) gained 1.51% (+0.31% for the week), Spanish IBEX 35 (ES35) gained 0.91% (-2.22% for the week), British FTSE 100 (UK100) gained 0.18% (-1.78% for the week).
Inflation in the Eurozone reached double digits for the first time ever. In September, it jumped to a record 10% (9.1% in August) on an annualized basis. Core inflation (which excludes food and fuel prices) reached 4.8% (4.3% in August). The extremely high inflation figures mean that the ECB will continue to raise rates quickly in upcoming meetings. Analysts believe rates will be raised by 75 BPS in October, 50 BPS in December, and 25 BPS in the first quarter of 2023.
Four treaties were signed in the Kremlin on Friday to admit new entities to the Russian Federation. The so-called DNR, LNR, Kherson, and Zaporizhzhia regions were "annexed" by Russia. Now, Moscow will consider possible strikes by Ukraine against the territories that will "join" Russia as an act of aggression against Russia. For its part, Ukraine applied to NATO under an accelerated procedure. The European Union, the US, Canada, Australia, and many other countries said they would never recognize the results of the referendums on the new territories joining Russia, and called on other countries to condemn them.
EU countries reached a preliminary agreement on a new package of measures against Russia.
The US and UK introduced a new package of sanctions against Russia, which included dozens of individuals and entities. US President Joe Biden said after Russia's annexation of new territories, the US would support Kyiv's attempts to take them back. Biden said that Russia violated international law and the UN charter with its actions. The UK also imposed sanctions on services and an export ban, targeting Russia's economic vulnerability. The UK is imposing an export ban on nearly 700 goods that are critical to Russia's industrial and technological capabilities. The UK will also prohibit Russia from accessing the services of its engineering, architectural, auditing, legal, and advertising companies.
Embassies of many countries have advised their citizens, whose stay in Russia is not dictated by necessity, to leave Russia as soon as possible. Norway may impose a travel ban on Russian tourists, similar to that previously imposed by Finland.
According to analysts, OPEC+ will consider cutting production by more than 1 million barrels a day this week. The meeting will be held on October 5. OPEC+, which brings together OPEC nations and allies such as Russia, has refused to increase production to lower oil prices despite pressure from major consumers, including the US, to help the global economy. Nonetheless, prices fell sharply last month because of concerns about the global economy and the rising US dollar. Oil over $90 is non-negotiable for OPEC+ leadership, so they will act to keep that price floor.
Fears that further interest rate hikes could slow economic growth, coupled with the looming financial crisis in Europe and the UK, have led some investors to start buying gold again. But it should be noted that as long as there are tightening policies from Central Banks, which leads to higher government bond yields, the price of gold and silver will not have fundamental support.
Asian markets were trading lower last week. Japan's Nikkei 225 (JP225) decreased by 3.15% for the week, Hong Kong's Hang Seng (HK50) fell by 3.14% for the week, and Australia's S&P/ASX 200 (AU200) was down 1.52% for the week.
In the commodities market, futures on orange juice (+5.82%), wheat (+4.86%), WTI oil (+2.98%), and Brent oil (+2.96%) showed the biggest gains. Futures on cotton (-7.78%), soybeans (-4.19%) and lumber (-2.34%) showed the largest drop.
S&P 500 (F) (US500) 3,585.62 −54.85 (−1.51%)
Dow Jones (US30) 28,725.51 −500.10 (−1.71%)
DAX (DE40) 12,114.36 +138.81 (+1.16%)
FTSE 100 (UK100) 6,893.81 +12.22 (+0.18%)
USD Index 113.02 +1.67 (+1.50%)
- – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
- – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
- – Spanish Manufacturing PMI (m/m) at 10:15 (GMT+3);
- – Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+3);
- – Italian Manufacturing PMI (m/m) at 10:45 (GMT+3);
- – French Manufacturing PMI (m/m) at 10:50 (GMT+3);
- – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
- – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
- – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
- – Canada Manufacturing PMI (m/m) at 16:30 (GMT+3);
- – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
- – US FOMC Member Williams Speaks (m/m) at 22:10 (GMT+3).
by , 2022.10.03
We advise you to get acquainted with the daily forecasts for the major currency pairs.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.
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