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The US stock indices increased yesterday on the technology sector's growth, as better-than-expected Tesla earnings supported the sector. The Dow Jones (US30) added 0.51% at the close, while the S&P 500 (US500) increased by 0.99%. The Technology Index Nasdaq (US100) jumped by 1.36%.

Shares of Tesla Inc (TSLA) jumped by 9.7% yesterday, giving confidence to the entire industry and the sector. Shares of Snap Inc (SNAP) fell by 24% in over-the-counter trading Thursday as the company said third-quarter revenue growth was flat and its results were affected by Apple's privacy changes. Shares of American Airlines (AAL) fell by 7% on the report, even as the company projected third-quarter earnings thanks to increased demand for travel services.

Biden tested positive for coronavirus. The US president has moderate symptoms and is working remotely.

Stock markets in Europe traded flat Thursday. German DAX (DE30) decreased by 0.27% yesterday, French CAC 40 (FR40) added 0.27%, Spanish IBEX 35 (ES35) lost 0.20%, British FTSE 100 (UK100) was up by 0.09%.

The European Central Bank unexpectedly raised its interest rate by 0.5%, even though Christine Lagarde had promised the first increase of 0.25%. The ECB report indicates that the decision is based on an updated assessment of inflation risks, as rising prices are a growing concern for households and companies. The future trajectory of interest rates will depend on the new data. ECB policymakers also agreed to provide additional assistance to the currency bloc's 19 heavily indebted countries, including Italy, with a new bond-buying scheme designed to limit their rising borrowing costs and thus limit financial fragmentation.

Investors are also closely watching the political situation in Italy, as Prime Minister Mario Draghi resigned on Thursday, and the president accepted his resignation, followed by the dissolution of parliament.

The Nord Stream 1 pipeline reopened after a 10-day hiatus. Germany's grid regulator has indicated that they are back to a capacity level of 40%. With the resumption of gas flows through Nord Stream, investors are more conciliatory on the part of Russia to continue supplying oil and petroleum products to Europe in the coming weeks or months.

Oil prices have fallen below $100 after a massive inventory build-up in the United States. But demand remains strong in mid-summer, so with production levels lagging, traders should not expect a significant drop in prices.

Asian markets mostly rose yesterday. Japan's Nikkei 225 (JP225) gained 2.67%, Hong Kong's Hang Seng (HK50) added 1.11%, and Australia's S&P/ASX 200 (AU200) closed by 1.65% higher.

Japan's key inflation indicator was even higher than the Bank of Japan's target of 2%. According to data released on Friday by the Ministry of the Interior, core consumer prices (excluding food and fuel prices) reached an annualized rate of 2.2%. The result was in line with economists' estimates. Despite the continued rise in prices, the Bank of Japan is unlikely to budge anytime soon, as the Bank of Japan remains unconvinced that inflation in the country is sustainable. The BoJ Governor Kuroda has repeatedly said that current cost inflation is unsustainable and that the central bank needs constant easing until it is demand-driven and accompanied by sustained wage growth. But wage growth has not kept pace with inflation, with May data showing that real wages are down 1.8% from a year ago.

In Australia, a NAB report showed that the RBA would raise rates to 2.85% by the end of the year. Since the monetary rate is still well below "neutral," this indicates continued rapid normalization in the coming months. This means a 50 bp interest rate hike at each of the next two meetings and then a pause to assess the impact of the rate hike.

• S&P 500 (F) (US500) 3,998.95 +39.05 (+0.99%)
• Dow Jones (US30) 32,036.90 +162.06 (+0.51%)
• DAX (DE40) 13,246.64 −35.34 (−0.27%)
• FTSE 100 (UK100) 7,270.51 +6.20 (+0.085%)
• USD Index 106.77 −0.31 (−0.29%)

Important events for today:

• Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• Japan National Core Consumer Price Index at 02:30 (GMT+3);
• UK Retail Sales (m/m) at 09:00 (GMT+3);
• Eurozone France Manufacturing PMI (m/m) at 10:15 (GMT+3);
• Eurozone France Services PMI (m/m) at 10:15 (GMT+3);
• Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• UK Services PMI (m/m) at 11:30 (GMT+3);
• Canada Retail Sales (m/m) at 15:30 (GMT+3);
• US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• US Services PMI (m/m) at 16:45 (GMT+3).

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