03 Nov

At today’s meeting, the FOMC will likely officially announce the reduction of the QE program

November 3, 2021

by JustForex

The main US indices closed in the green zone yesterday. By the end of the trading day Dow Jones index increased by 0.39%, S&P 500 gained 0.37%, NASDAQ added 0.34%. Dow Jones and S&P 500 indices renewed their highs. Tesla shares fell by 3% as the company recalled about 11.7 thousand Model S, Model 3, and Model X electric cars produced in 2017-2021 and Model Y (2020-2021) due to a software error. Pfizer’s stock price increased by 4.2%. The company increased net income 5.5 times in Q3 2021, revenue 8.5 times, and improved its full-year outlook.

Today, traders’ attention is focused on the Fed meeting. It is expected that the Federal Reserve will announce the cutting of its monthly bond purchase program. However, even if it happens, traders should not expect any significant shocks on the market because, firstly, it has been already priced in. Secondly, the “cut” will be gradual, most likely 10 billion a month. In other words, they will complete the tapering program and rest the interest rate by the summer fall next year. Also, a lot will depend on the dynamics of inflation. As many analysts expect, if inflation continues to rise rapidly, the Fed could raise interest rates sooner. If the central bank talks about a faster reduction (some Fed members favor a quicker cut), it could have a big impact on the market.

The head of the World Medical Association, Frank Ulrich Montgomery, wants to revaccinate the population every six months.

The US has approved the use of the Pfizer vaccine for children 5 to 11 years old. In New York, about 9,000 unvaccinated officials were placed on unpaid vacation. Canada suspended 3,300 unvaccinated doctors without pay. Air Canada suspended more than 800 employees due to refusing to vaccinate.

Last days Biden held a meeting with G-20 leaders that focused on supply chain issues. According to a White House report on the summit, the United States, the European Union, and 14 other countries agreed to promote the expansion of international cooperation in connection with short-term difficulties in the supply chain.

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Another important international event attracting the attention of global markets is the climate summit in Glasgow, Scotland. The meeting is held under the auspices of the United Nations and is perceived as a crucial step for world leaders in taking action to reduce CO2 emissions. However, analysts do not expect countries to adopt highly ambitious targets at the end of the summit.

European stock indexes were trading yesterday without a single trend. The British FTSE 100 decreased by 0.19%, the German DAX gained 0.94%, and the French CAC 40 added 0.49%. Italy’s FTSE MIB and Spain’s IBEX 35 decreased by 0.06% and 0.84%, respectively. The Prime Minister of the Netherlands announced that the country is imposing new restrictions because of Covid-19. The government is asking people to work from home half the time.

Several oil traders said that the $100 oil price is fast approaching reality as the demand exceeds the proposal. Climate change has caused a slowdown in investment in new sources, which threatens the depletion of reserves. Futures quotes for oil rose sharply due to the worldwide spike in gas and coal prices caused by the global energy crisis. Iran plans to resume exporting oil products within two weeks.

Gas prices in Europe jumped over 2% on news of Gazprom’s refusal to book additional gas transit capacity via Ukraine and Poland.

The main Asian indices are trading in the red zone today. The only exception is the Australian index. Investors are cautious ahead of the Fed meeting today, and the main issue is not the reduction of the QE program but to make it clear when the Fed will start to raise interest rates.

China has unexpectedly increased its injection of short-term cash into the banking system fivefold because banks also need to postpone cash to buy bonds so that creditors can pay off the record 1 trillion yuan in medium-term loans.

Main market quotes:

S&P 500 (F) 4,630.65 +16.98 (+0.37%)

Dow Jones 36,052.63 +138.79 (+0.39%)

DAX 15,954.45 +148.16 (+0.94%)

FTSE 100 7,274.81 −13.81 (−0.19%)

USD Index 94.11 +0.23 (+0.25%)

Important events for today:
  • – UK Services PMI (m/m) at 11:30 (GMT+2);
  • – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
  • – Eurozone ECB President Lagarde Speaks at 12:15 (GMT+2);
  • – US ADP Non-Farm Employment Change (m/m) at 14:15 (GMT+2);
  • – US ISM Services PMI (m/m) at 16:00 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 16:30 (GMT+2);
  • – US FOMC Statement at 20:00 (GMT+2);
  • – US Fed Interest Rate Decision at 20:00 (GMT+2);
  • – US FOMC Press Conference at 20:30 (GMT+2).

by JustForex

 

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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