China announced a massive economic stimulus. Gas prices in Europe hit another high

At the stock market close yesterday, the Dow Jones Index (US30) added 0.18%, while the S&P 500 (US500) decreased by 0.29%. The NASDAQ Technology Index (US100) gained 0.41%.

The US durable goods orders were unchanged month-over-month in July. Unfinished US home sales fell in July for the sixth time this year to the lowest level since the pandemic began, extending a sharp decline in the housing market. The number of signed contracts was down 22.5% from a year ago. Rising interest rates always negatively affect the housing market, so things will only worsen in the near future.

Today, traders of Fed funds futures contracts estimate a 61% probability that the Fed will raise rates by 75 basis points at its September meeting. The probability of a 50 basis point hike is 39%.

Equity markets in Europe traded yesterday without a single dynamic. German DAX (DE30) gained 0.20%, French CAC 40 (FR 40) increased by 0.39%, Spanish IBEX 35 (ES35) lost 0.33%, British FTSE 100 (UK100) closed on Wednesday down by 0.22%.

The German government is concerned about possible problems with coal supplies for power plants in the fall and winter due to low water levels in the Rhine River and oil supplies in the eastern parts of the country. The price of gas in Europe has exceeded $3100 per 1,000 cubic meters for the first time since early March. Dutch gas prices, the European benchmark, rose again Wednesday as the prospect of an end to supplies through the Nord Stream 1 pipeline kept investors on edge. Russia's state energy company Gazprom said Friday that Russia would suspend natural gas supplies to Europe via Nord Stream 1 for three days because of unscheduled maintenance.

The Energy Information Administration reported a 3.3 million barrel drop in crude oil inventories for the week through August 19. Also, yesterday it became known that OPEC countries are going to fight with low oil prices, and in case Iranian oil returns to the world market, OPEC countries (in particular Saudi Arabia and Iraq) are ready to cut their production in order not to allow the oil prices to fall significantly.

Asian markets were mostly down yesterday. Japan's Nikkei 225 (JP225) decreased by 0.49%, Hong Kong's Hang Seng (HK50) ended the day down by 1.20%, while Australia's S&P/ASX 200 (AU200) was up by 0.52%.

On Wednesday, Japan's prime minister said that his country would restart several idle nuclear power plants and study the possibility of developing next-generation reactors. It indicates that Japan (a major energy importer) is looking to bolster its capabilities amid continued uncertainty in global energy markets. Japan is aiming for carbon neutrality by 2050. According to the "ambitious outlook," the country's 6th Strategic Energy Plan calls for renewables to account for 36% to 38% of its electricity generation mix in 2030, with nuclear power accounting for 20% to 22%.

Stats NZ data showed a 2.3% drop in seasonally adjusted retail sales in the last quarter in New Zealand. Economists had forecast a 1.7% increase as consumer spending was expected to rebound after the initial Omicron hit, which reduced retail spending by 1% in the year's first quarter. Analysts believe the drop in retail spending points to a potential recession.

China announced an additional 1 trillion yuan ($146 billion) in stimulus to save the economy from recession. The stimulus measures will include an additional 300 billion yuan, which state banks can invest in infrastructure projects.

S&P 500 (F) (US500) 4,140.77 +12.04 (+0.29%)

Dow Jones (US30) 32,969.23 +59.64 (+0.18%)

DAX (DE40) 13,220.06 +25.83 (+0.20%)

FTSE 100 (UK100) 7,471.51 −16.60 (−0.22%)

USD Index 108.61 −0.02 (−0.01%)

• – New Zealand Retail Sales (q/q) at 01:45 (GMT+3);
• – Eurozone Germany GDP (q/q) at 09:00 (GMT+3);
• – Eurozone Germany Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting at 14:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Jackson Hole Symposium at 16:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

by JustMarkets, 2022.08.25

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.