The Bank of Canada has begun to cut the bond-buying program

Major US indices traded yesterday without a single trend. By the close of the stock market Dow Jones index decreased by 0.74%, S&P 500 index lost 0.51%, and the Nasdaq index added 0.02%. The traders' attention is still focused on the companies' reports for the third quarter. About 30% of the companies included in the S&P 500 index have reported their results. The profit of 82% of them exceeded analysts' expectations, and the revenue of 80% of these companies also exceeded forecasts. Strong results of the companies are one of the key drivers of the growth of major stock indices. Meanwhile, US bond yields increased to their highest level since the pandemic began.

Former US President Donald Trump opposes a tax on billionaires. According to the former US leader, US billionaires would prefer to leave for another country if the tax is introduced.

Major European indices fell yesterday at the end of the day. Germany's DAX and Britain's FTSE 100 decreased by 0.33%, France's CAC 40 lost 0.19%, Italy's FTSE MIB and Spain's IBEX 35 fell by 0.61% and 0.33%, respectively. Today, traders' attention will be focused on the European Central Bank (ECB) meeting. Analysts do not expect the ECB to adjust its monetary policy at the October meeting. However, they will closely follow the regulator's chief Christine Lagarde's speech at the news conference after the meeting as rising inflation, and high energy prices may change the initial plans of policymakers.

London's Heathrow airport expects traffic to fully recover by about 2026, while the number of travelers flying through the largest airport of Great Britain is significantly lower than the level existing before the pandemic, even though over the past three months their number has increased.

The US oil inventories unexpectedly increased by 4.27 million barrels over the week. Amid this news and the news about the resumption of talks with Iran to lift sanctions, including the embargo on exports of "black gold," oil fell to its lowest level in a week and showed the strongest decline since August. Japanese Prime Minister Kishida said that measures to support oil prices would be implemented.

Russian President Vladimir Putin instructed Gazprom to increase reserves in Europe - Austria and Germany - after the completion of pumping into Russian storage facilities. Against the background of this news, the price of gas in Europe fell to $960/mcf.

The Bank of Japan (BoJ) kept interest rates unchanged and lowered its growth forecast for the current year. The BoJ also kept monetary policy conditions soft, forecasting inflation well above the 2% target for at least two more years. It indicated that BoJ would lag behind other central banks in winding down its crisis management policy.

Canada's central bank left its key interest rate at 0.25%. It declared the termination of the bond purchase program, referring to Canada's strong economic growth, high vaccination rates, and a significant increase in employment. The Bank of Canada also signaled that it may raise interest rates as soon as April 2022 and said inflation would remain above target for most of next year due to rising energy prices and supply chain problems.

A survey of economists shows that central banks are cutting stimulus measures too quickly, and supply chain disruption is a major global economic threat. Global growth will decrease to 4.5% in 2022, compared with 5.9% in 2021.

Asian stock indices decreased Thursday amid fears that recovery from the pandemic will slow as high inflation forces tighter monetary policy. Japan's Nikkei 225 index lost 0.87%, Australia's ASX 200 decreased by 0.25%, China's CSI300 lost 0.67%, and Hong Kong's Hang Seng decreased by 0.14%. Commodity prices, including aluminum, iron ore, and coal, also fell.

Main market quotes:

S&P 500 (F) 4,551.68 −23.11 (−0.51%)

Dow Jones 35,490.69 −266.19 (−0.74%)

DAX 15,705.81 −51.25 (−0.33%)

FTSE 100 7,253.27 −24.35 (-0.33%)

USD Index 93.88 −0.07 (−0.07%)

Important events for today:
  • – Japan Retail Sales (m/m) at 02:50 (GMT+3);
  • – Japan BOJ Monetary Policy Statement (m/m) (tentative);
  • – Japan BOJ Outlook Report (m/m) (tentative);
  • – Japan BOJ Interest Rate Decision (m/m) at 06:00 (GMT+3);
  • – Japan Press Conference (tentative);
  • – German Unemployment Rate (m/m) at 10:55 (GMT+3);
  • – Eurozone Monetary Policy Statement (m/m) at 14:45 (GMT+3);
  • – Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+3);
  • – Eurozone Press Conference at 15:30 (GMT+3);
  • – US GDP (q/q) at 15:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Pending Home Sales (m/m) at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

by Justforex, 2021.10.28

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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