S&P 500 review:
The US market showed the first noticeable decline in a week.
Thursday's US indices: Dow -0.5%, S &P 500 -0.6%, NASDAQ -0.6%.
On Friday morning, the Asian market was multi-directional: China indexes +0.5%, Japan -0.4%.
Raw materials market review:
Oil showed strong growth of +1.5% in the morning, the October Brent futures exceeded $ 72. It is worth noting that oil still demonstrated strength, albeit the US market decline. It has already risen by $ 7 or more +10% from last week's low.
In terms of news background, particularly COVID-19, the second day is near the highs of the third wave. There are 714 thousand new cases in the world, and the US is in first place again in the world with 170 thousand new cases. In Europe, we have Britain with 38 thousand new cases yesterday. In response to the growth of this virus, business owners in the US are tightening the requirements for employees to be vaccinated.
S&P 500 4470, range 4430-4500. The news on the US economy came out in line with expectations yesterday. The second reading of US GDP for Q2 showed 6.6% growth, in line with the forecast. The GDP deflator +6.1% is another confirmation of the high inflation inconvenient for the Fed. Perhaps, it was inflation that caused the US market to decline on Thursday before the inflation index report today. The forecast shows a decrease in smoothed inflation from +0.5% to +0.4%. Without seasonal smoothing a month ago, the report showed inflation of +3.5% compared to last year.
Meanwhile, the weekly report on US employment data showed that the labor market's rapid recovery after the collapse into a pandemic is clearly stopping. The number of initial applications for unemployment benefits is stabilizing at about 350 thousand per week, while the number of long-term recipients of benefits is at the level of 2.86 million.
China is preparing a new step in the struggle for leadership with the United States – China plans to ban large Internet companies that have large amounts of data of Chinese citizens from placing shares on foreign exchanges, that is, on US exchanges in the first place.
USDX 92.90, range 92.60-93.20. The dollar index will be in the range quite possibly until the Fed meeting in September. Today's inflation report may cause a movement in the US dollar if the data is very different from the forecast.
USD/CAD 1.2665, range 1.2600-1.2700. It is worth noting that the US dollar rose against the Canadian dollar yesterday despite the strong strengthening of oil prices recently. The pair is likely to get some immunity to oil prices.
In conclusion, the markets are waiting for the US inflation data today. Investors should take into account that the big correction in the US market is long overdue and may begin in the very near future - for example, today.
