The US Federal Reserve is discussing a less aggressive policy. Xi Jinping was re-elected president of China.

By JustMarkets

The US stock indexes rose Friday after news that US Federal Reserve officials are discussing a 0.5% interest rate hike in November, raising hopes that the central bank may adopt a less aggressive policy. As the stock market closed on Friday, the Dow Jones Index (US30) increased by 2.47% (3.48% for the week), and the S&P 500 Index (US500) added 2.37% (2.93% for the week). The NASDAQ Technology Index (US100) jumped by 2.31% on Friday (2.69% for the week).

According to a Wall Street Journal report, some Fed officials have begun stating their desire to slow the pace of the increase soon. On Friday, San Francisco Federal Reserve President Mary Daly said it was time to start talking about slowing the pace of borrowing costs and that the Fed should be less aggressive in its rate hike cycle. Charles Evans, president of the Federal Reserve Bank of Chicago, also cited similar statements. According to Reuters calculations, speculators’ net long rates on the US dollar rose last week.

The four largest US companies by market capitalization are due to report this week. Investors are filled with optimism as corporate earnings help keep the stock market from falling amid soaring inflation and an aggressive Federal Reserve rate hike.

Stock markets in Europe were mostly down Friday, but all closed the week in positive territory. German DAX (DE30) decreased by 0.29% on Friday (+2.11% for the week), French CAC 40 (FR40) lost 0.85% (+1.44% for the week), Spanish IBEX 35 (ES35) fell by 1.29% (+1.72% for the week), British FTSE 100 (UK100) was up by 0.15% (+1.62% for the week).

Boris Johnson announced that he would not run for the Conservative Party leader and British Prime Minister post. Johnson’s announcement will pave the way for Rishi Sunak, who will likely become the next prime minister. Liz Truss was forced to resign after she launched an economic program that caused turmoil in the financial markets. Former Finance Minister Rishi Sunak earlier confirmed that he would be on the ballot, promising to handle the country’s “deep economic crisis” with “honesty, professionalism, and accountability.” Chancellor Jeremy Hunt, who is expected to remain in office under the new prime minister, said Friday that he would do “whatever is necessary” to reduce the national debt ahead of his new budget, to be announced on October 31.

Oil prices rebounded Friday as hopes for stronger demand in China and a weaker US dollar outweighed concerns about the global economic slowdown and the impact of higher interest rates. Overall, the oil market remains uncertain as, on the one hand, OPEC+ production cuts and European sanctions against Russia for its invasion of Ukraine are keeping oil prices from falling. On the other hand, falling oil demand in the largest importer China, along with the release of strategic reserves by the US, are keeping the price down.

Chinese President Xi Jinping secured an unprecedented third presidential term and introduced a top governing body made up of loyalists, cementing his place as the country’s most powerful ruler since Mao Zedong. On Monday, China released a slew of macroeconomic statistics, the publication of which was delayed by a week because of the presidential re-election. The data indicated that China’s GDP grew by 3.9% in the last quarter, but analysts believe the numbers do not correspond to reality. China now faces a host of economic challenges, and China’s biggest concerns remain the real estate market and falling manufacturing numbers due to the new Covid lockdowns.

Japan’s promised economic stimulus should be big enough to overcome the economy’s manufacturing deficit of about 15 trillion yen ($100 billion), a top ruling party official said Sunday. On Friday, Japan’s Finance Ministry held another intervention to protect the yen from falling further. The background to such price movement is the continuing unequal monetary policy between the Bank of Japan and the Federal Reserve.

At the commodities market, futures on lumber (+8.36%), silver (+7.35%), platinum (+4.44%), and Brent oil (+2.15%) showed the biggest gains over the week. Futures on natural gas (-22.64%), cotton (-4.51%), coffee (-3.94%), cocoa (-3.2%) and sugar (-2.49%) showed the biggest drop.

S&P 500 (F) (US500) 3,752.75  +86.97 (+2.37%)

Dow Jones (US30) 31,082.56 +748.97 (+2.47%)

DAX (DE40) 12,730.90 −36.51 (−0.29%)

FTSE 100 (UK100) 6,969.73 +25.82 (+0.37%)

USD Index 111.18 −0.14 (−0.12%)

• – Australia Manufacturing PMI (m/m) at 01:00 (GMT+3);
• – Australia Services PMI (m/m) at 01:00 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – China GDP (q/q) at 05:00 (GMT+3);
• – China Retail Sales (m/m) at 05:00 (GMT+3);
• – China Industrial Production (m/m) at 05:00 (GMT+3);
• – China Unemployment Rate (m/m) at 05:00 (GMT+3);
• – China Exports (m/m) at 06:00 (GMT+3);
• – China Imports (m/m) at 06:00 (GMT+3);
• – French Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – French Services PMI (m/m) at 10:15 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US Treasury Secretary Yellen Speaks at 18:00 (GMT+3).

By JustMarkets

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.