U.S. stock market sees biggest capital outflow

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The US stock market closed in the green zone on Friday. The Dow Jones Industrial Average rose 0.10% (+ 0.98% for the week), the S&P 500 for 0.15% (+ 1.19% for the week) and the Nasdaq Technology Index for 0.11 % (+ 1.96% on the week). Despite all major indexes rising at the end of the week, US stocks saw their biggest weekly outflow in more than three years, with traders withdrawing $ 28.6 billion from US equity funds over the course of the week. With the start of the QE program in just over a month, there is no reason to expect any further significant growth in the indices.

U.S. House of Representatives Speaker Nancy Pelosi has urged fellow Democrats to embrace the Biden administration’s $ 3.5 trillion spending package. The House of Representatives is due to vote on the infrastructure package on Thursday. US President Joe Biden said in his speech that the administration will make historic tax cuts for the middle class and raise taxes for big business and wealthy citizens.

Western European stock exchanges closed Friday’s session lower. The British FTSE 100 index fell 0.4% (+ 1.26% over the week), the German DAX fell 0.7% (+ 1.78% over the week), the French CAC 40 fell. lost 1% (+ 2.92% over the week), the Spanish IBEX 35 down 0.4% (+ 2.71% over the week). Inventories of sporting goods producers fell on Friday. Adidas AG was down 2.5%, Puma SE 3% and JD Sports 2.4%. The UK consumer confidence index fell five points in September compared to the previous month. The UK is facing several crises at once: rising international gas prices forcing energy companies to close their doors, threatening to undermine meat production; a truck driver shortage that is wreaking havoc on retail and leaving not only store shelves empty, but gas stations as well. In Germany, the Chancellor organized elections to succeed Angela Merkel, who headed the German office for 16 years. The first exit poll data have been released in Germany. The German Social Democrats led by Olaf Scholz lead the Bundestag elections with 26%.

Energy shortages around the world continue. Natural gas prices in Europe are at record highs. The gas crisis in Europe is already more serious than the oil shock of the 1970s in the United States. Oil prices rose for the fifth day in a row on Monday, with Brent crude hitting $ 80 amid concerns over tight supply as parts of the world see demand rise as pandemic conditions ease. Goldman Sachs has raised its year-end forecast for Brent crude oil from $ 80 to $ 90 a barrel.

The 10-year Treasury yield fell from 1.30% to 1.45% last week after the Fed signaled a cut to its quantitative easing program. Rising yields and a rising dollar index are always negative for gold and silver prices, as these instruments are inversely correlated.

Coal prices in China have also reached an all time high. China’s National Energy Administration (NEA) has ordered coal and gas companies to increase production to ensure the country has enough energy to keep homes warm in the winter. Car sales in China could increase in 2021, breaking a three-year slump. Vietnam plans to ease coronavirus measures and allow companies to resume production from next week to support an economy hit by prolonged lockdowns.

In addition to the semiconductor shortages plaguing many industries, there is a shortage of passive components such as capacitors. The Chemi-Con, Nichicon and Rubycon factories in Malaysia and Indonesia, where most of the well-known aluminum electrolytic capacitors are manufactured, were closed in July and August. Meanwhile, the three listed companies together control around 50% of the market for these products. Current restrictions are expected to reduce capacitor shipments by 30-60%.

Foreign investors in Evergrande did not receive interest. Evergrande Payment was due on Thursday. The missed payment opens Evergrande’s grace period, which could lead to the biggest default. It would also raise questions about investors’ financial solvency and could cause them to start selling their other assets to cover losses.

Main market quotes:

  • S&P 500 (F) 4,455.48 +6.50 (+ 0.15%)
  • Dow Jones 34,798.00 +33.18 (+ 0.095%)
  • DAX 15,531.75 −112.22 (−0.72%)
  • FTSE 100 7,051.48 −26.87 (−0.38%)
  • USD Index 93.28 −0.19 (−0.20%)

Important events for today:

  • Speech by President Lagarde of the ECB of the euro zone at 2.45 p.m. (GMT + 3);
  • Speech by American FOMC member Evans at 3:00 p.m. (GMT + 3);
  • Basic durable goods orders in the United States (m / m) at 3:30 p.m. (GMT + 3);
  • Speech by American FOMC member Williams at 19:00 (GMT + 3);
  • Speech by US member of the FOMC, Brainard, at 7.15pm (GMT + 3);
  • Speech by British BoE Governor Andrew Bailey at 9:00 p.m. (GMT + 3).
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