The ECB is likely to start reducing its asset repurchase program in the next quarter

The number of initial jobless claims in the US fell to an 18-month low (currently 310,000, previously 345,000). This statistics dispelled fears of slowing economic recovery, but also increased other concerns that the Fed would start to reduce the QE program as early as November this year. The main US stock indexes closed in the red zone yesterday. The S&P 500 and Dow Jones indices decreased for the fourth session in a row. This is not a good sign, which indicates that investors are closing their positions. Many analysts expect the market to fall in the coming months. The head of the Federal Reserve Bank of Atlanta Rafael Bostic says that the Fed may start to reduce the asset purchase program this year and make the appropriate decision at the next meeting. Only an increase in the number of COVID-19 cases can put off the decision, but the situation is under control so far.

European stock indices traded mixed yesterday. The British FTSE 100 decreased by 1% to its lowest level since July 28, while Spain's IBEX 35 decreased to its lowest level since early August. Meanwhile French CAC 40 increased by 0.2%, German DAX added 0.08%, Italian FTSE MIB added 0.1%. The ECB announced that the volume of its Pandemic Emergency Purchase Program (PEPP) would remain unchanged, but it's possible the regulator would begin to reduce the bond-buying program in the next quarter. Also, the ECB raised its forecast for Eurozone GDP growth in 2021, while lowering its forecast for 2022 and keeping its 2023 forecast unchanged. The region's inflation forecast for 2021 was raised to 2.2% from 1.9%, for the next year to 1.7% from 1.5%, and for 2023 to 1.5% from 1.4%.

The situation in the oil market is getting more complicated. Yesterday, China began selling oil from its strategic reserves to ease inflationary pressures in the country. Such news led to a sharp drop in oil prices. Asian buyers of oil from the US Gulf of Mexico platforms, which were shut down due to Hurricane Ida, are now looking for alternatives from Russia and the Middle East, which also puts pressure on prices. On the other hand, US oil inventories decreased by 1.5 million barrels per week, which plays in favor of higher prices.

The uncertainty over the timing of QE program cuts puts pressure on gold prices. With a high probability, investors will not see significant growth before the start of the "tapering", so both gold and silver are likely to trade in a wide corridor.

China's Shanghai Composite closed at its highest level in six years. A phone call between the US and Chinese leaders added to investors' optimism. Asian stock indexes increased on Friday as Chinese tech stocks recovered. Stocks added more than 1% in Japan and Hong Kong.

Main market quotes:

S&P 500 (F) 4,493.28 −20.79 (−0.46%)

Dow Jones 34,879.38 −151.69 (−0.43%)

DAX 15,623.15 +12.87 (+0.08%)

FTSE 100 7,024.21 −71.32 (−1.01%)

USD Index 92.52 −0.13 (−0.14%)

• – UK GDP (q/q) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3).

by JustMarkets, 2021.09.10

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.