Accelerating inflation in the US and rising Delta strain cases continue to weigh on financial markets

On Friday, the US stock indices finished trading in the red zone amid concerns about accelerating inflation. Investors believe that the Fed is unable to control inflation, so even though many major corporations have reported high net profits and revenues due to the economic recovery, the fixation of the previously open positions is still observed in the market. Last week, the Dow Jones decreased by 0.52%, the S&P 500 decreased by 0.97%, and the Nasdaq lost 1.87%. This week is not as eventful as the previous week, but it will be decisive and show whether the market is willing to continue the uptrend by turning a blind eye to high inflation. This week, the decline in stock indices could trigger a wave of sell-offs and the start of a big correction in the US stock market.

The European stock market closed with a slight decline on Friday. At the same time, the decline for the whole week was the worst over the last month. In the past week, the FTSE 100 has fallen by almost 2%, German DAX - by more than 1%, French CAC 40 has lost 1.3%. Despite the rising number of coronavirus cases in the UK per day, the country is lifting almost all remaining restrictions today as ministers believe in a vaccination program. However, British Prime Minister Boris Johnson will go into self-imposed isolation after coming into contact with a man who was infected with COVID-19.

Oil prices are falling amid OPEC+ decision to increase production. Since August, OPEC+ countries will begin to increase oil production by 400,000 barrels per day until the complete winding down of the cuts, which were provided in May 2020. Thus, demand will begin to catch up with supply, so the price increase to $100 per barrel is canceled.

Despite the drop in gold prices on Thursday and Friday, it closed the week at +0.2%. But at the opening of trading on Monday, gold started falling sharply. The reason for the decline is the growth of the Treasury bonds yield (inverse correlation with gold) on the background of the good report on the US retail sales for June.

Asia-Pacific stock indices are now strongly correlated with US indices, so there is also a decrease. Investors' concerns are also associated with the growth of Delta strain cases in the region.

Main market quotes:

S&P 500 (F) 4,327.16 -32.87 (-0.75%)

Dow Jones 34,687.85 -299.17 (-0.86%)

DAX 15,540.31 -89.35 (-0.57%)

FTSE 100 7,008.09 -3.93 (-0.06%)

USD Index 92.71 +0.09 (+0.10%)

by JustMarkets, 2021.07.19

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.