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The US stock indices were trading lower on Friday. By the closing of the stock market, Dow Jones (US30) decreased by 0.85% (-0.01% for the week), and S&P 500 (US500) lost 1.29% (-0.96% for the week). The Nasdaq Technology Index (US100) fell by 2.01% (-2.24% for the week). Amazon, Apple, and Microsoft all fell, and the S&P 500 and Nasdaq slowed the most. Higher rates tend to be negative for technology companies and growth stocks.

Richmond Federal Reserve President Thomas Barkin said on Friday that US Central Bank officials still have plenty of time before they need to decide how much to raise interest rates in September. The recovery in US stocks is inspiring confidence among investors. The S&P 500 (US500) rebounded about 16% from its low after its worst first half since 1970, helped by stronger-than-expected corporate earnings, and hopes the economy can avoid a recession.

Stock markets in Europe were mostly down on Friday. German DAX (DE30) decreased by 1.12% (-2.19% for the week), French CAC 40 (FR40) lost 0.94% (-1.32% for the week), Spanish IBEX 35 (ES35) fell by 1.09% (-1.05% for the week), British FTSE 100 (UK100) was up by 0.11% (+0.66% for the week).

In the last few days, Europe has been hit by the rains. Water levels in a key German bottleneck on the Rhine River jumped, easing a crisis that has hampered energy and industrial production this month. An extended period of very hot and dry weather this summer drained Europe's rivers, disrupting the transportation of goods and energy at a time when the region needs alternative energy sources instead of gas the most. This helped push natural gas prices to record highs, increasing inflationary pain for industries and households and threatening to push Germany into recession.

On Sunday, a senior ministry official said that energy-intensive industries in Italy are also modifying their production to save energy as they struggle with rising bills. Italy recently struck deals with several alternative gas-producing countries to reduce its dependence on Moscow. Those agreements allowed Rome to fill its gas storage facilities quickly, but it was not enough to protect its industry from skyrocketing energy prices.

Oil prices stabilized on Friday but fell over the week because of a stronger US dollar and fears that the economic slowdown would weaken demand for crude oil. The strengthening US dollar hit a five-week high, which limited the rise in oil prices as it makes oil more expensive for buyers in other currencies. Haitham al-Gais, the new secretary general of the Organization of the Petroleum Exporting Countries, told Reuters he was optimistic about oil demand in 2023.

Asian markets traded flat last week. Japan's Nikkei 225 (JP225) decreased by 0.04% for the week, Hong Kong's Hang Seng (HK50) added 1.32% for the week, and Australia's S&P/ASX 200 (AU200) was up by 1.17% for the week.

Earlier this year, the COVID-19 shutdown in China disrupted global supply chains, causing delays in shipments and production worldwide and hampering economic growth. Now the country faces another severe threat, and that threat could be even worse for the economy. This month, China is battling its worst heat wave in 60 years. In Sichuan province, home to more than 80 million people, the record-breaking heat wave has exacerbated an ongoing drought that has caused reservoir levels to drop by half this month. As a result, officials announced on Aug. 15 that factories in 19 cities and prefectures would be forced to close for five days to save power.

The People's Bank Loan Prime Rate rate was cut for the second time in two weeks. The move comes as the bank struggles to stimulate the economy amid headwinds from COVID lockdowns, a debt-laden real estate market, and a looming energy crisis.

In the commodities market, futures on natural gas (+5.84%) and cotton (+3.64%) showed the largest gains over the week. Futures on lumber (-12.23%), silver (-8.37%), platinum (-7.31%), wheat (-6.33%), orange juice (-5. 91%), palladium (-4.03%), coffee (-3.96%), sugar (-3.06%), gold (-3.04%), soybeans (-2.88%), WTI oil (-2.68%), and Brent oil (-2.1%) showed the biggest drop.

• S&P 500 (F) (US500) 4,228.48 −55.26 (−1.29%)
• Dow Jones (US30) 33,706.74 −292.30 (−0.86%)
• DAX (DE40) 13,544.52 −152.89 (−1.12%)
• FTSE 100 (UK100) 7,550.37 +8.52 (+0.11%)
• USD Index 108.10 +0.62 (+0.58%)

Important events for today:

• China PBoC Loan Prime Rate at 04:15 (GMT+3).

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