High inflation in Europe led to a sharp rise in the dollar index

Despite the decline in US GDP growth and a weak Q4 forecast for many major companies, the leading US indices S&P 500, NASDAQ, and Dow Jones demonstrated their strongest gains since November 2020 and set new price highs last week. By the end of the week, the S&P 500 index increased by 1.14%, the Dow Jones index added 0.36%, and the technology index NASDAQ jumped by 2.35%. Many analysts are confused that major stock indexes continue to rise despite many economic problems, declining major economic indicators, and continuing concerns about supply chain issues.

American Airlines canceled more than 1,800 flights over the weekend, which, along with cancellations by other companies, can break the plans for travelers. Gusts of wind at the end of last week caused serious problems with flights.

The US and the EU reveal a new era of transatlantic cooperation. The US and European Union on Sunday ended a dispute over steel and aluminum tariffs and said they would work on a global agreement to combat dirty production and overcapacity in the industry. A future agreement between the EU and the US would be a challenge for China, which produces more than half of the world's steel.

The US President Joe Biden said he was disappointed that Russia and China were not present at the G20 meeting.

Businessman Elon Musk will sell his Tesla shares if it is proven that it will help fight world hunger. He made such a statement on Twitter.

Despite Friday's weak close, major European indices also increased by the week. Germany's Dax gained 0.69%, Britain's FTSE 100 added 0.46%, France's CAC 40 rose by 1.15%, Spain's IBEX 35 jumped by 1.35%, and Italy's FTSE MIB added 0.61%. Germany's Q3 GDP increased by 1.8%, a growth of 2.2% was expected. In September, German retail sales fell by 2.5% (a 0.6% increase was expected). The consumer price index in Europe reached 4.1%, the highest since 2008. Core inflation (excluding food and energy prices) in Europe reached 2.1%, the highest level since 2003.

On Sunday, UK Prime Minister Boris Johnson noted that only 12 of the G20 members have pledged to reduce greenhouse gas emissions by 2050.

The US, India, Japan, and other major oil consumers are engaged in an "active campaign" to convince OPEC+ to increase the rate of production growth. Countries have gathered in a coalition and are preparing measures to force OPEC+ countries to pump more oil. Exchange oil prices previously hit multi-year highs. At the last meeting, OPEC+ members decided not to increase the current plan to increase oil production but to stick to the previously agreed pace, namely a monthly production increase of 400,000 barrels per day. The next OPEC+ meeting is scheduled for November 4. Goldman Sachs remains bullish on oil with a $90 target per barrel.

Gold continues to fall in price, despite being cited as a hedge against inflation. As already mentioned, on the eve of the "tapering" (QE cuts), buying gold is a bad idea because when government bond yields rise, gold and silver prices fall.

The ruling Liberal Democratic Party in Japan has won more than half of the seats in the lower house of parliament, which opened the way for Fumio Kishida's administration to implement economic stimulus.

China's manufacturing activity index was 50.6 (forecast 50, previous 50). China's credit market has been experiencing the greatest shock in recent years. Chinese real estate developers need to make $2 billion in bond payments this month.

For the week, the Japanese Nikkei 225 increased by 1.18%, the Chinese CSI 300 decreased by 0.65%, Hong Kong's Hang Seng fell by 2.47%, and the Australian ASX 200 index lost 1.83%. During the first trading session of November, stock indices in Asia were mainly green. The only exception is the Hong Kong Stock Exchange, where investors are still concerned about the real estate sector in China and the pace of economic recovery in the country.

Main market quotes:

S&P 500 (F) 4,605.38 +8.96 (+0.19%)

Dow Jones 35,819.56 +89.08 (+0.25%)

DAX 15,688.77 −7.56 (−0.05%)

FTSE 100 7,237.57 −11.90 (−0.16%)

USD Index 94.13 +0.79 (+0.85%)

Important events for today:
  • – Japan Manufacturing PMI (m/m) at 02:00 (GMT+2);
  • – China Manufacturing PMI (m/m) at 03:45 (GMT+2);
  • – German Retail Sales (m/m) at 09:00 (GMT+2);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
  • – US ISM Manufacturing PMI (m/m) at 16:00 (GMT+2);
  • – Canada Manufacturing PMI (m/m) at 16:30 (GMT+2).

by Justforex, 2021.11.01

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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