Hints of ending QE program hitting Wall Street and rising inventories pressure on oil

2021-09-29T17:59:19
Evergrande Evergrande crisis markets Oil Wall Street
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Hints of ending QE program hitting Wall Street and rising inventories pressure on oil

Hints of ending QE program hitting Wall Street and rising inventories pressure on oil :It’s not usual for September to be the strongest for the US stock market.

The statistics published and the situation with the public debt “ceiling” do not contribute to an increased level of investment optimism. 

The Converse Broad consumer confidence index fell for the third month in a row in September.

Gas prices set records, but these prices will contribute even more to rising inflationary pressures.

In September, the number of recipients of $2000 in checks in the US fell dramatically, but some of that money stemmed from the growth of the US stock market.

Evest follows all this and more in the following report:

topics:

Hints of ending QE program

Record declines on Wall Street

Oil inventories are rising sharply

Chinese authorities are interfering with the Evergrande crisis

Decline in Asian markets

 

Hints of ending QE program

The resounding remarks of FRS representatives had the effect of causing tension in the markets.

The chairman of the Federal Reserve Bank of St. Louis said the Fed must act more effectively to tackle inflation.

He did not rule out the possibility of two base rate increases in 2022. 

The Chairman of the United States Federal Reserve, Powell, announced the Fed’s willingness to end its quantitative easing program.

A tighter monetary policy would hurt tech stocks the most.

The United States Department of the Treasury will be able to meet its financial obligations without raising the US national debt limit until around October 18,

and therefore, this situation will gradually escalate. 

US Treasury Secretary Janet Yellen said that if the debt limit was not resolved, America would default for the first time in history.

The full confidence and creditworthiness of the United States will fade, and the country is likely to face a financial crisis and economic recession. 

However, according to experts, Republicans do not want to cooperate,

and this will have a negative impact on the situation in the stock markets in the coming days.

The Chairman of the Federal Reserve Board of the Banking Committee reiterated his willingness to close the stimulus program soon,

contributing to the dollar rising to its highest level since November 2020. The strong dollar was a reason to fix profits, for the commodity speculators.

 

Record declines on Wall Street

US stock indices declined 1.6-2.8% on Tuesday, the Nasdaq fell by -2.8%, the highest since March 18,

and the Dow Jones (-1.6%) fell for the first time in five trading sessions.

Maximizing the yield on government bonds since June negatively affects the stock market (the yield on the 10-year terrestrial reservoirs exceeded 1.5% annually),

as well as the growth in the cost of energy resources.

US Treasury Secretary Janet Yellen said her department’s funds could run out by October 18 if Congress does not increase the borrowing limit.

Federal Reserve Chairman Jerome Powell said the regulator met almost all the criteria for starting a rollback of stimulus procedures.

He said that inflation in the United States is likely to continue rising in the coming months, but then slow down.

The Chairman of the Federal Reserve Board said that rising inflation,

caused by problems in supply chains and other factors associated with the recovery of economic activity

after the Coronavirus pandemic, turned out to be longer and more important than expected.

Oil inventories are rising sharply

Oil prices continue to decline on Wednesday morning amid renewed concerns about the pace of global economic recovery under the Coronavirus pandemic after oil inventories increased.

On the eve of Brent crude price, its price rose to $80.75 per barrel – the highest level in 3 years.

The statistics of the American Petroleum Institute added a slightly negative sentiment,

showing an increase in crude oil inventories by 4.1 million barrels, and gasoline – by 3.6 million barrels,

and distillates products – by 2.5 million barrels. 

If statistics from the United States Department of Energy were released on Wednesday, another reason for the decline in oil would appear. 

Also negative for raw materials is the reduction of the Chinese economy’s outlook for this year from leading banks because of risks in the real estate sector and the energy crisis. 

As oil is in the peak purchasing zone, the deadlock may continue to decline, although the $75 per barrel support for Brent crude remains appropriate.

Chinese authorities are interfering with the Evergrande crisis

Chinese authorities intervened to help Evergrande and bought 20% of its stocks in Chengjiang Regional Bank for 10 billion yuan ($1.55 billion). However, t

he troubled developer’s creditors are not likely to receive these funds.

One of China’s biggest real estate developers, China Evergrande, which faced debt problems and low liquidity,

announced that it would sell Chengjiang Bank stocks to the State Administration Corporation for $1.5 billion.

The company’s stocks ratio is 11.6%.

Decline in Asian markets

The negative dynamics of stock indexes also prevail in Asia on Wednesday, with Japan’s Nikkei index fell by 2.1%,

China’s Shanghai composite by 1.7%, and Hong Kong’s Hang Seng index rose by 0.6%.

Investors in the region are worried about a slowdown in the expected growth rate of the Chinese economy,

which is facing an energy crisis. Goldman Sachs economists expect China’s GDP to rise by 7.8% in 2021, down from 8.2% in previous projections. 

Earlier, Nomura Bank and rating agency Fitch also cut their expectations for an increase in the Chinese economy.

The country’s energy supply crisis is associated with the fact that some regions of China are facing a real electricity shortage amid a sharp jump in the price of coal and natural gas,

while others are demanding that companies provide electricity in order for the government to achieve emissions reductions. 

As a result, Chinese producers warned that strict requirements to reduce electricity use would lead to a decline in production in the country’s major economic centers.

On Wednesday, the People’s Bank of China (PBOC) the provided country’s banks with Part IX of the cash for 100 billion yuan

in reverse buyback to ensure adequate liquidity in the banking system.

The Central Bank of China said in a statement that the 14-day interest rate on transactions was 2.35% per year.

Investors are also watching the election of a new prime minister in Japan,

which will be held in the ruling Liberal Democratic Party on Wednesday.

Yesterday, the Associated Press reported that Japan would abolish the emergency regime introduced in connection with the Covid-19 pandemic as of October 1, and gradually lift the restrictions.

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