High inflation in the US may be delayed for several quarters

US stock indices ended yesterday's trading without a single trend. The Dow Jones index has not changed much, while the S&P 500 and Nasdaq added 0.3% and 0.73%, respectively. According to the Fed meeting, in September, the Fed leaders discussed the plan of cutting the quantitative easing program (QE), holding the view that the reduction of asset purchases should begin by the end of this year and be completed by mid-2022. The reduction in asset purchases could begin in mid-November or mid-December. Fed officials also pointed to risks that inflation would take longer than expected, especially if labor and other resource shortages will be more constant.

The US Consumer Price Index increased to 5.4% (expected 5.3%), the largest annual gain since 2008. The core CPI, which excludes food and energy prices, remained at level of 4%. On the back of this news, the dollar index was losing ground yesterday.

Apple stock fell by almost 10% since the beginning of September and decreased by  2% in yesterday's trading after the company released news on the limitation of production goals.

Former US President Donald Trump blasted the presidency of his successor, Joe Biden, in a message on Wednesday. "COVID is raging out of control, our supply chains are crashing with little product in our stores, we were humiliated in Afghanistan, our Border is a complete disaster, gas prices and inflation are zooming upward—how’s Biden doing? Do you miss me yet?" said Trump.

Famous companies reporting today are Taiwan Semiconductor, UnitedHealth, Bank of America, Wells Fargo&Co, Morgan Stanley, Citigroup, Domino's Pizza Inc.

European stock indices traded mixed yesterday. German DAX and French CAC 40 closed with solid gains of 0.7% and 0.8%. At the same time Italian FTSE MIB and Spanish IBEX 35 indices decreased by 0.1% and 0.6%, respectively. The energy crisis, problems in the supply chain and inflationary pressures continue to pressure on the market. EU energy ministers will hold an emergency meeting on October 26 to address the energy problem. Deutsche Bank's CEO urged the European Central Bank to review monetary policy in light of rising inflationary threats.

Nyrstar, one of the world's largest zinc metal producers, is shutting down up to 50% of its production in Europe due to soaring energy costs. Zinc prices are skyrocketing.

Oil prices resumed their growth after a slight decline the day before. The market is still under pressure by the energy crisis in Europe and Asia, which contributes to increased demand for oil with a restrained increase in production by OPEC+ countries. The US EIA raised its 2021 Brent crude oil price forecast from $68.6 to $71.4 per barrel. The White House is in talks with US oil and gas producers about how companies can help lower oil prices.

The last time oil was above $80 per barrel (2014), the US and European oil and gas companies were trading at levels 1.5 to 2 times higher than they are now. The key difference this time is that trillions of investment dollars are now associated with environmental and social regulations that prohibit exposure to dirty energy.

Gold prices jumped 2% after US inflation data. But analysts are confident that the rise in gold and silver prices is temporary, as prices for these metals will fall rapidly when the QE program is cut.

Asia's largest refiner, which is based in China, intends to cut fuel exports as it wants to keep more supplies for domestic consumption amid an energy crisis caused by coal shortages.

China's inflation has remained roughly the same, but the gap between producer and consumer inflation widened in September to 10%, the highest level since 1993.

Main market quotes:

S&P 500 (F) 4,363.80 +13.15 (+0.30%)

Dow Jones 34,377.81 −0.53 (−0.002%)

DAX 15,249.38 +102.51 (+0.68%)

FTSE 100 7,141.82 +11.59 (+0.16%)

USD Index 94.03 −0.48 (−0.51%)

Important events for today:
  • – Australia Unemployment Rate (m/m) at 03:30 (GMT+3);
  • – China Consumer Price Index (m/m) at 04:30 (GMT+3);
  • – China Producer Price Index (m/m) at 04:30 (GMT+3);
  • – Japan Industrial Production (m/m) at 07:30 (GMT+3);
  • – US Producer Price Index (m/m) at 15:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US FOMC Member Bostic’s Speech at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
  • – US FOMC Member Barkin’s Speech at 20:00 (GMT+3).

by Justforex, 2021.10.14

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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