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The Dow Jones index had a positive start to the week on Monday as a rally in energy offset weakness in the technology sector ahead of quarterly reports from major technology companies and a Federal Reserve meeting. As the stock market closed yesterday, the Dow Jones index (US30) increased by 0.28%, and the S&P 500 Index (US500) added 0.13%. The Technology Index Nasdaq (US100) was down by 0.35% yesterday.

The threat of a recession could push the Fed to roll back its hike cycle as the central bank tries to get a soft landing for the US economy, and rising interest rates bring the US economy closer to recession. According to analysts, lower inflation expectations and an expected decline in the Consumer Price Index are imminent in the coming months. That means the Fed's hawkishness is at its peak, and a change in the Fed's outlook could lead to a bearish US dollar reaction.

On Monday, US retailer Walmart (WMT) Inc lowered its earnings forecast and said shoppers are cutting back on discretionary purchases as inflation hits family budgets. Shares of WMT fell by 10% on the report.

Microsoft (MSFT), Alphabet (GOOGL), Visa (V), Louis Vuitton ADR (LVMUY), Coca-Cola (KO), McDonald's (MCD), United Parcel Service (UPS), Texas Instruments (TXN), Raytheon Technologies (RTX), Unilever ADR (UL), 3M (MMM), General Electric (GE), General Motors (GM) and others report today.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) was down by 0.33% on Monday, French CAC 40 (FR40) gained 0.33%, Spanish IBEX 35 (ES35) gained0.42%, British FTSE 100 (UK100) was up by 0.41%.

Business sentiment in Germany is cooling down. The Ifo Business Climate Index fell to 88.6 points in July from 92.2 points (seasonally adjusted) in June and reached its lowest value since June 2020. Companies expect doing business to become much more difficult in the coming months. Higher energy prices and the threat of gas shortages are putting pressure on the economy. Germany is on the verge of a recession.

Oil rose in volatile trading ahead of the Federal Reserve's rate decision this week. Oil prices increased amid expectations that a reduction in natural gas supplies from Russia to Europe could encourage a switch to crude oil.

Asian markets traded lower yesterday. Japan's Nikkei 225 (JP225) decreased by 0.77%, Hong Kong's Hang Seng (HK50) fell by 0.22%, and Australia's S&P/ASX 200 (AU200) ended the day gaining 0.02%.

Singapore's Consumer Price Index rose from 5.6% to 6.7% year on year, surpassing economists' median estimate of 6.2%. The last time such a figure was in 2008. The core Consumer Price Index, which excludes fuel and living expenses, increased to 4.4% in June from 3.6% in May. According to experts, a rebound in domestic demand in some regional economies as the Covid-19 restrictions are loosened could lead to a further rise in inflation.

In Australia, inflation data will be released on Wednesday. In addition to being an important indicator, Australia publishes consumer price data once a quarter. The RBA is expected to hold its monetary policy meeting next week. It is expected that inflation will rise to 4.7% YoY from 3.7%. Thus, the most likely scenario for the central bank's further actions is another 0.5% rate hike.

• S&P 500 (F) (US500) 3,966.84 +5.21 (+0.13%)
• Dow Jones (US30) 31,990.04 +90.75 (+0.28%)
• DAX (DE40) 13,210.32 −43.36 (−0.33%)
• FTSE 100 (UK100) 7,306.30 +29.93 (+0.41%)
• USD Index 106.43 −0.30 (−0.28%)
   

Important events for today:

• Japan Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3);
• US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• US New Home Sales (m/m) at 17:00 (GMT+3).

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