Futures on US stock indices returned to the day's opening levels and reduced the growth observed in the morning. European stocks immediately declined after data on producer prices convinced the Federal Reserve System to go for another rate hike.
But while futures on major US indices are "dancing" at annual lows, the yield of 30-year UK securities has risen above 5%. This is because yesterday, the governor of the Bank of England confirmed his plan to stop emergency bond purchases. The Bank of England also said that interest rates are likely to rise sharply in November and warned that some British households might face the same serious debt repayment problem as before the 2008 financial crisis.
The Bank of England realized that raising interest rates and, at the same time, buying bonds is a waste of money and time. So it will not cope with inflation, especially since it is about to get above the level of 13% - well, this is according to the official forecasts of the regulator.
The yield on US Treasury bonds and the dollar exchange rate remained virtually unchanged after data showed that prices paid to US manufacturers rose more than expected in September. And all this is on the eve of the key indicator for consumer inflation, which will be released tomorrow and will likely return to its forty-year high. Even though the global economy is already slowing down after the rate hike, there has not been a significant reduction in inflation yet, and it is unlikely to happen in the near future.
Meanwhile, British banks have shown the worst results in Europe in recent times. Credit Suisse Group AG fell after reports that US authorities were investigating whether the bank helped clients hide assets. LVMH shares rose after a jump in quarterly sales.
Crude oil continues to fluctuate. OPEC has cut forecasts for the amount of oil it will need to pump this quarter. Russian President Vladimir Putin said that the world's energy infrastructure is threatened after the Nord Stream pipeline explosions.
Even though there are no extreme bearish sentiments anymore, investors are still skeptical about what is happening and are unlikely to return to the market soon.
As for the technical picture of the S&P500, yesterday, there was another decline in the trading instrument. Now trading is below $3,608, which makes it difficult for the index to recover even in the short term. The bulls will expect a dash to $3,608 at the beginning of the regular session. But only a breakdown of this level will return the trend to an upward correction. The breakdown of $ 3,608 will support a new upward momentum, already aimed at the resistance of $3,645 and $3,677. The furthest target will be in the area of $3,706. In the event of further downward movement, the bulls will declare themselves in the area of $3,579, as it was already today. However, a breakdown of this range will quickly push the trading instrument to $3,544 and open up the possibility of updating support and $3,507 – a new annual minimum for the index.
