The US Real Estate market continues to decline. ECB to raise interest rate today

By JustMarkets

The US stock indices were trading yesterday without a single trend. By the close of trading, the Dow Jones Index (US30) gained 0.01%, while the S&P 500 Index (US500) decreased by 0.74%. The NASDAQ Technology Index (US100) fell by 2.04% on Wednesday.

The US economic data released by the US Commerce Department showed that home sales in September fell by 10.9% from the previous month, while August’s 685,000 unit figure was revised downward to 677,000, indicating that the Federal Reserve’s aggressive policies continue to hold back the real estate market.

Shares of Meta Platforms Inc (Facebook) fell more than 20% on the report after third-quarter earnings missed Wall Street estimates.

Visa, meanwhile, closed 5% higher after posting quarterly results that beat net income estimates, driven by continued consumer spending and a recovery in activity.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 1.09%, France’s CAC 40 (FR40) added 0.41%, Spain’s IBEX 35 (ES35) increased by 0.97%, and the British FTSE 100 (UK100) closed by 0.61% on Wednesday.

The euro weakness may lead to a further rise in consumer prices at the expense of imports, said German Deputy Finance Minister Florian Toncar. Toncar’s remarks contrast with recent comments from other European leaders, who stressed the risk of recession and suggested that the cost of borrowing in the eurozone should not increase too sharply.

The European Central Bank will raise interest rates again today and likely provide a subsidy to commercial banks, taking another important step in tightening policy (QT) to combat a historic spike in inflation. The ECB will almost certainly raise its deposit rate by 75 basis points to 2% and make clear that the size of the next steps remains open for discussion. The central bank is also likely to take the first steps to reduce its balance sheet of €8.8 trillion. Signaling that future steps will be more difficult, ECB President Christine Lagarde is likely to give only vague guidance, arguing that additional increases are needed, but incoming data and new economic forecasts in December will be the key.

According to the World Bank, a sharp slowdown in global growth and restrictions imposed because of the coronavirus pandemic in China are key downside risks to oil consumption. But with OPEC+ countries limiting oil production starting in November, the medium-term outlook for oil remains upward.

Shell company on Thursday reported third-quarter earnings of $9.45 billion, down from the previous quarter. But the company announced plans to increase its dividend by 15% by the end of the year. Shell also expanded its stock buyback program, announcing plans to buy $4 billion worth of stock over the next three months.

Asian markets closed in positive territory yesterday. Japan’s Nikkei 225 (JP225) jumped by 0.67%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.00%, and Australia’s S&P/ASX 200 (AU200) increased by 0.18%.

Solid wage growth is likely to be the trigger that will push the Bank of Japan away from ultra-low interest rates. With Japan’s economy still weak, the Bank of Japan is not expected to raise interest rates soon, even if it means increasing downward pressure on the yen, which has fallen to a 32-year low against the dollar. Analysts say that Governor Haruhiko Kuroda’s second five-year term ends in April, opening the prospect of a gradual withdrawal of his radical economic stimulus program.

S&P 500 (F) (US500) 3,830.60 −28.51 (−0.74%)

Dow Jones (US30) 31,839.11 +2.37 (+0.01%)

DAX (DE40) 13,195.81 +142.85 (+1.09%)

FTSE 100 (UK100)  7,056.07 −0.51 (+0.61%)

USD Index 109.71 −1.24 (−1.14%)

• – Eurozone Monetary Policy Statement at 15:15 (GMT+3);
• – Eurozone Interest Rate Decision at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – Eurozone ECB Press Conference at 15:45 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (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.