06 Sep

The RBA expectedly raised the interest rate by 0.5%. The UK has chosen a new prime minister

September 6, 2022

By JustForex

The US stock indices did not trade yesterday due to the banking holiday in the United States.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 2.22%, French CAC 40 (FR40) was 1.20% lower, Spanish IBEX 35 (ES35) lost 0.88%, British FTSE 100 (UK100) added 0.09% on Monday.

Germany’s trade surplus narrowed to 5.4 billion euros ($5.4 billion) from 6.2 billion euros in June as exports fell by 2.1% and imports fell by 1.5%, the statistics office said. Germany plans to completely stop gas supplies from Russia in December 2022. The German chancellor believes that Russia cannot be considered a reliable energy supplier because it has long violated its contractual obligations. The leaders of Germany’s government coalition parties agreed on a third $65 billion bailout package for citizens due to high energy prices.

The Eurozone Services PMI Index fell from 50.2 to 49.8. A value below 50 is seen as a pre-recession indicator. The biggest drop of the leading economies was observed in Spain (53.8→50.6) and Germany (48.2→47.7). France (51.0→51.2) and Italy (48.4→50.5) showed an increase in business activity.

Liz Truss won a majority of votes in the second round and became the third female prime minister of Great Britain. She will officially take office on Tuesday after Johnson submitted his resignation petition to Queen Elizabeth II. Investors are now watching to see what steps the new UK government will take to reduce the negative effects of rising prices and energy bills. Truss has promised a “bold plan” for tax cuts and an energy crisis

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The European Union may introduce a “price ceiling” on Russian gas, European Commission head Ursula von der Leyen said. The Council of Europe will soon come up with this initiative.

According to the results of the first half of 2022,China has become one of the largest buyers of Russian gas. LNG shipments from Russia to China increased by 63%, exceeding Chinese domestic demand.

The meeting of OPEC and non-OPEC countries noted the negative impact of volatility and declining liquidity on the current oil market and the need to maintain market stability and its effective functioning. Following yesterday’s meeting of OPEC+ countries, the main oil-producing countries agreed to cut production by 100 thousand barrels per day starting from October. This may give a temporary bullish momentum to oil quotes.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.11% yesterday, Hong Kong’s Hang Seng (HK50) was down 1.16%, and Australia’s S&P/ASX 200 (AU200) added 0.34% by the end of the day.

The People’s Bank of China cut the required reserve ratio of foreign currency deposits that banks must keep with the Сentral Bank. Theoretically, this should stop the trend of the yuan weakening.

The Reserve Bank of Australia raised its interest rate by 50 basis points to 2.35%. The RBA predicts inflation will continue to rise in the coming months, peaking at the end of the year. The RBA predicts inflation will be around 7.75% in 2022, just above 4% in 2023, and around 3% in 2024

S&P 500 (F) (US500) 3,924.26 −42.59 (−1.07%)

Dow Jones (US30) 31,318.44 −337.98 (−1.07%)

DAX (DE40) 12,760.78 −289.49 (−2.22%)

FTSE 100 (UK100) 7,287.43 +6.24 (+0.09%)

USD Index 109.83 +0.30 (+0.27%)

Important events for today:
  • – Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
  • – Australia RBA Rate Statement (m/m) at 07:30 (GMT+3);
  • – UK Construction PMI (m/m) at 11:30 (GMT+3);
  • – US ISM Service PMI (m/m) at 17:00 (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.


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