China’s economic indicators are declining. Europe is forecasting a recession

By JustForex

The US stock indices traded higher on Friday. By closing the stock market Dow Jones (US30) gained 1.27% (+2.69% for the week), and S&P 500 (US500) added 1.73% (+2.99% for the week). The NASDAQ Technology Index (US100) jumped by 2.09% (+2.70% for the week).

The University of Michigan index for August 2022 rose to 55.1 from 52.5. According to the report, the US inflation is expected to be 5% by year-end (5.2% previously), with the 5-year inflation rate rising from 2.9% to 3.0%. Other data showed that US import prices declined in July for the first time in seven months due to lower fuel and non-fuel costs.

Mary Daly, president of the Federal Reserve Bank of San Francisco, said Thursday that she is open to another 75 basis point increase in September. At the moment, traders estimate there is about a 42.5% chance of a 75-basis-point Fed rate hike in September and a 57.5% chance of a 50-basis-point hike.

Equity markets in Europe were mostly up on Friday. German DAX (DE30) gained 0.74% (+0.67% for the week), French CAC 40 (FR40) added 0.14% (+0.67% for the week), Spanish IBEX 35 (ES35) gained 0.24% (+2.17% for the week), British FTSE 100 (UK100) rose by 0.47% (+0.82% for the week).

In France, inflation rose to 6.8% year-over-year, while in Spain, consumer prices reached 10.8% (y/y), the highest level since 1984. Europe is digging deeper into the energy crisis, and the high inflation rate only exacerbates an already huge number of problems. Commerzbank expects a recession in the Eurozone as a baseline scenario.

The UK’s economic outlook is deteriorating rapidly. While the labor market remains resilient, there is a high probability that UK consumer inflation could reach double digits this week. The Bank of England has already warned that inflation could reach 13% this year (expected to peak in October  2022) while the economy enters five quarters of recession.

In Germany, low water levels on the Rhine, Germany’s commercial artery, have disrupted shipping and increased transportation costs more than fivefold.

Poland’s Foreign Ministry announced that it is joining Finland, Estonia, Latvia, and Denmark to impose a Europe-wide ban on tourist visas for Russians.

The EU and 42 countries issued a statement calling on Russia to immediately withdraw troops from the territory of the Zaporizhya nuclear power plant and Ukraine.

Asian markets traded higher last week. Japan’s Nikkei 225 (JP225) gained 2.26%, Hong Kong’s Hang Seng (HK50) added 0.55%, and Australia’s S&P/ASX 200 (AU200) rose by 0.24%. At the opening session on Monday, the Japanese indices jumped over 1% on the background of the GDP growth in the last quarter. Chinese indices, on the contrary, declined as data on industrial production and retail sales failed to meet economists’ expectations. Against this backdrop, China’s Central Bank unexpectedly cut key lending rates on Monday.

Chinese leader Xi Jinping plans to meet with US President Joe Biden on his first overseas trip in nearly three years, which is scheduled for November this year.

Japanese Prime Minister Fumio Kishida on Monday instructed officials to develop an additional package of steps by early September to ease consumers’ pain from rising wheat and energy import prices amid Russia’s war in Ukraine.

In the commodities market futures on lumber (+22.85%), cotton (+12.96%), natural gas (+8.88%), gasoline (+6.74%), coffee (+6. 49%), silver (+5%), soybeans (+4.65%), palladium (+4.34%), corn (+4.3%), platinum (+4.19%), sugar (+3.96%), wheat (+3.71%), copper (+3.59%), Brent oil (+3.26%), and WTI oil (+3.22%) showed the biggest growth over the week. Orange juice futures (-0.68%) showed the biggest drop.

S&P 500 (F) (US500) 4,280.15 +72.88 (+1.73%)

Dow Jones (US30) 33,761.05 +424.38 (+1.27%)

DAX (DE40) 13,795.85 +101.34 (+0.74%)

FTSE 100 (UK100) 7,500.89 +34.98 (+0.47%)

USD Index 105.67 +0.58 (+0.56%)

• – Japan GDP (q/q) at 02:50 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – Japan Industrial Production (m/m) at 07:30 (GMT+3);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+3);
• – Canada Wholesale Sales (m/m) at 15:30 (GMT+3).

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.