S&P500
On Monday, the US market completed a short-term correction and closed at record highs of the year. US indices rose steadily yesterday and closed as follows: Dow +0.6%, S&P 500 +0.85%, NASDAQ +1.55%.
As we see, technology is back in the lead.
Asian stock markets rallied for the second straight day, following the US market: Japanese indices +0.9%, China +1.3%.
Commodity market. Yesterday oil prices added more than $3, or 5%. By this morning, Brent had risen to $69.10. Oil prices show a strong rally following the rise of the US and Asian stock markets amid the growth of the global economy and the recovery in demand in Europe. The U.S. Energy Department announced on Monday that it intends to sell up to 20 million barrels of crude oil from the nation's Strategic Petroleum Reserve. US crude oil production now averages 11.3 million barrels per day (b/d).
COVID in the world. Yesterday, the number of average daily cases in the world fell to about 515 K, which is about 20% below the highs. A sharp increase was also registered in the US (+110 K cases), UK (+32 K), and Japan (+22 K). In Europe, daily case numbers are lower than in the United States due to the higher percentage of vaccinations. There, the number of people who have been vaccinated is about 60-65%. Russia reported 19454 new COVID-19 cases on Monday, the first time the daily tally has dipped below 20000 since June 23. The number of confirmed cases in Moscow and St. Petersburg decreased significantly. In the regions, there has not yet been a noticeable decline.
German GDP grew 9.4% on year in the second quarter. Economists had forecast 9.2% growth.
S&P 500: 4,479. Trading range: 4,440-4,500. Monday was relatively quiet on the economic data front. The US existing home sales data was released. In July, the activity of the US real estate market rose again. Total existing-home sales rose to an annual rate of 5.99 million homes in July, against estimates for an annual rate of 5.85 million. This shows that the US boom is not only in the stock market but also in the real estate market. Many experts predicted a long-term and deep correction of the US market after the Fed's announcement about the beginning of the tapering quantitative easing program in November this year. However, investors are willing to keep buying despite high stock prices. The market behavior is increasingly reminiscent of an inflating bubble.
Shares of the world's most powerful luxury companies fell to 5%, pressured by a Chinese head of state Xi JinPing's speech. Chinese leader stated China must pursue a goal of so-called common prosperity. He called for the reasonable adjustment of excessive incomes and encouraging high income groups and businesses to return more to society. Manufacturers of luxury items could be hit hard since China buys up to 30% of such goods in the world.
The US Federal Reserve System will hold its annual conference in Kansas City amid high inflation. The inflation rate in the United States increased by 5.4 percent last month compared with a year earlier. The rate of PCE inflation will be released later in the week.
USDX: 92.90. Trading range: 92.60–93.10. Yesterday the dollar index fell to 92.90 from 93.40, which may indicate a change in market sentiment. The dollar is clearly not going to rise anytime soon.
USDCAD: 1.2620. Trading range: 1.2550–1.2680.
The US dollar fell sharply against the Canadian dollar due to yesterday's rise in oil prices.
Conclusion. Technically, the US market is set for growth. At the same time, the prices are not reasonable for long-term purchases. Buying should be done only after a strong decline.
