The European indices ended today’s session lower as renewed recession concerns weakened risk sentiment. The Dax index fell by 1.73% and the CAC40 by 0.90%, driven mainly by real estate companies, car makers and industrial companies.
Most likely, OPEC will wait for what Biden proposes in the meeting in Saudi Arabia
Inflation in Germany fell to 7.6% in June, slowing from a record high of 7.9% in May, while inflation in Spain jumped to 10.2%, its highest level since 1985. Bank of England governor Bailey said during a meeting with the ECB that British monetary authorities will not have to take decisive measures to lower inflation, which contrasts with statements by Fed chairman Jerome Powell. However, he pointed out that the UK economy is starting to slow down. Powell reiterated that the Fed is determined to do whatever is necessary to control high inflation, and said the greater risk was failure to restore price stability. The US economy is healthy and well placed to withstand a monetary tightening, although it risks slowing down more than necessary. He also confirmed that the Fed is raising interest rates quickly and intends to enter the restriction area fairly quickly. After Powell’s comment, the US indices lost previous gains. The Dow Jones is slightly below opening, with the S&P 500 and Nasdaq declining 0.50% and 0.60% respectively. The decline in US GDP in Q1 has been revised to an annualized level of -1.6%, from a decline of -1.5% in the second estimate. Data on consumer activity was very weak, but inventories were better. CHF and USD are the best performing major currencies while EUR and GBP remain the weakest. Crude oil was very volatile today. At the beginning, we saw significant increases caused by the lack of OPEC decisions about further changes in production limits. Most likely, OPEC will wait for what Biden proposes in the meeting in Saudi Arabia.
The United States reports that it is talking to Arab countries about increasing production. The United States also announced a possible further release of strategic stocks after October. At the moment, strategic inventories have fallen below 500 million brk. Oil inventories according to DOE fell for the second week in a row (previous data were delayed until today). However, the report showed a significant increase in inventories of petroleum products. US refineries are operating at their highest level of use in history. Additionally, stocks in Cushing have dropped to an extremely low unsafe level which could lead to problems receiving supplies.
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