Photo by Austin Distel on Unsplash

At Tuesday's stock market close, the Dow Jones Index (US30) increased by 0.40%, while the S&P 500 Index (US500) added 0.52%. The NASDAQ Technology Index (US100) closed positive by 0.58% yesterday. All three indices hit their 2-week price highs. On Tuesday morning, stocks opened higher amid prospects of additional stimulus in China, which will favor global growth after Bloomberg reported that China is preparing for a new round of stimulus to support its economy. Stocks further extended gains after comments from FRB Atlanta President Bostic reinforced speculation that the Fed is about to take a pause in raising interest rates.

The International Monetary Fund (IMF) warned of persistent inflation and urged the world's central banks to maintain tight policy until price pressures ease, lowering its 2024 global GDP forecast to 2.9% from July's forecast of 3.0% and raising its 2024 global inflation forecast to 5.8% from July's forecast of 5.2%.

Equity markets in Europe were mostly up yesterday. Germany's DAX (DE40) increased by 1.95%, France's CAC 40 (FR40) gained 2.01% on Tuesday, Spain's IBEX 35 (ES35) jumped by 2.19%, and the UK's FTSE 100 (UK100) closed up by 1.82%. Eurozone economic news on Tuesday lent support to the euro after Italian industrial production unexpectedly rose by 0.2% m/m in August, exceeding expectations of a decrease by 0.3% m/m. ECB Governing Council spokesman Holzmann said yesterday that inflation needs to be kept under control, and supply shocks could force the ECB to raise interest rates one or two more times. This is a more hawkish stance than was previously the case.

Minutes from the Bank of England's last monetary policy meeting showed that the UK Banking System remains strong enough to support households and businesses even if economic conditions are worse than we expect. The UK banking system has substantial capital reserves and other resources to cover potential losses or cash outflows. Participants believe that interest rates are likely to remain high for an extended period of time.

There was profit taking in crude oil after the IMF lowered its global GDP forecast for 2024. But losses in crude oil were limited by a weaker dollar and heightened fears that the conflict between Israel and Hamas could widen and disrupt crude oil supplies from the Middle East. In addition, the prospect of additional stimulus from China is supporting energy demand and oil prices.

Asian markets traded flat yesterday. Japan's Nikkei 225 (JP225) was up by 2.43%, China's FTSE China A50 (CHA50) decreased by 0.58%, Hong Kong's Hang Seng (HK50) added 0.84%, and Australia's ASX 200 (AU200) ended the day positive by 1.01%.

China is considering widening its budget deficit for 2023 as the government prepares for a new round of stimulus to help the economy reach its 5% growth target. Policymakers may issue an additional 1 trillion yuan ($137 billion) worth of government debt to finance infrastructure spending.

S&P 500 (F)(US500) 4,358.24 +22.58 (+0.52%)

Dow Jones (US30) 33,739.30 +134.65 (+0.40%)

DAX (DE40)  15,423.52 +295.41 (+1.95%)

FTSE 100 (UK100) 7,628.21 +136.00 (+1.82%)

USD Index  105.77 -0.31 (-0.29%)

News feed for 2023.10.11:

• – US FOMC Member Daly Speaks at 01:00 (GMT+3);
• – German Consumer Price Index (m/m) at 09:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 11:15 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – Canada Building Permits (m/m) at 15:30 (GMT+3);
• – US FOMC Member Bostic Speaks at 19:15 (GMT+3);
• – US FOMC Meeting Minutes at 21:00 (GMT+3).

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