Investors await key US inflation data

The US stock market traded without a single dynamic yesterday. At the close of the day, the Dow Jones index increased by 0.46%, making a new all-time high, the S&P 500 index added 0.10%, and the NASDAQ technology index decreased by 0.49%. The rise in Dow Jones was mainly due to the approval of the $1 trillion infrastructure project. The top gainers among Dow Jones index components were shares of Caterpillar Inc. (+2.46%) and Walmart Inc. (+2.13%). Today, the previous month’s US inflation data will be published. A rise in inflation could cause strong sales in financial markets, as cutting the Federal Reserve QE program is the only way to suppress inflation. Rising inflation could also heighten expectations of rate hikes next year. If inflation is lower, there is a possibility that everything will remain the same.

European stock indices mostly increased yesterday due to strong corporate reports. The Stoxx Europe 600 composite index of the largest companies in the region increased by 0.35%. British FTSE 100 jumped by 0.4%, German DAX added 0.16%, French CAC 40 increased by 0.1%, Italian FTSE MIB increased by 0.24%, Spanish IBEX 35 added 0.37%. At the same time, the ZEW economic sentiment index in Germany has sharply decreased to 40.4 in August (previously 63.3). The Eurozone economic sentiment index also decreased from 61.2 to 42.7. Such negative data indicated a slowdown in economic recovery in the region.

According to an Energy Information Administration (EIA) report, OPEC oil production will be below oil deal targets during the third and fourth quarters of 2021. Fundamentally, it plays in favor of higher oil prices. But concerns about the spread of the Delta strain in Asian countries are still holding back the rise in quotes.

Today, the consumer price index data for the previous month will be published in the US. Rising inflation will most likely lead to an increase in the dollar index and government bond yields, sending gold and silver prices sharply lower. Conversely, if inflation data is good (declining inflation), precious metal prices could jump.

Asian stock indices are mostly rising today ahead of key US inflation data. Lenovo shares jumped by 7.8%, as the company's quarterly net income increased to a record high. Meanwhile, due to stronger quarantine restrictions in Japan, China, South Korea, and other Asian countries, experts are already seeing signs of weakening economic activity in the region, especially in the tourism and manufacturing sectors. In Australia, the consumer confidence index fell to its lowest level within a year due to the restrictions.

Main market quotes:

S&P 500 (F) 4,436.75 +4.40 (+0.10%)

Dow Jones 35,264.67 +162.82 (+0.46%)

DAX 15,770.71 +25.30 (+0.16%)

FTSE 100 7,161.04 +28.74 (+0.40%)

USD Index 93.06 +0.09 (+0.09%)

• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Core Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US FOMC Member Bostic’s Speech at 17:30 (GMT+3).

by JustMarkets, 2021.08.11

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.