US 500 reached a new historical maximum on the background of strong US macroeconomic data, indicating the recovery of the US economy and the Fed’s stimulating monetary policy. The stock market was also boosted by the news that the USA and China held high-level talks on the implementation of the first phase of the trade deal. The parties confirmed their readiness to fulfill their commitments under the first phase of the trade deal.
Oil price reached a 5-month maximum as an impending hurricane disrupted production in the Gulf of Mexico. Producers have halted offshore production in the Gulf of Mexico due to Hurricane Laura approaching the coast. Producers have ceased production of 1.56 million barrels per day, which is 84% of production in the Gulf of Mexico.
The gold price has been consolidating after a downward correction. A change in the Fed’s approach to inflation targeting could boost the price of gold, which is considered as a hedge against inflation.
Dollar remains under pressure amid expectations of a change in the Fed’s approach to inflation targeting, which may be announced on Thursday by Fed Chairman Jerome Powell. The essence of the change in approach is to target the average inflation rate. Given that the inflation rate has been below the target of 2% for a long period, such a step by the regulator would mean that inflation rate may exceed 2%, meaning that the Fed will continue to pursue a stimulating monetary policy even if the inflation rate exceeds 2%, putting downward pressure on the dollar and contributing to the growth of the stock market.
Main events of the current week
- On Thursday, US macroeconomic data will be published, in particular, data on GDP for the second quarter, the number of jobless claims and pending home sales. Fed Chairman Jerome Powell will deliver a speech at a symposium in Jackson Hole.
- On Friday, data on the GDP of Canada will be presented. Governor of the Bank of England Andrew Bailey will speak as well.
Corporate earnings reports
Hewlett Packard will release its quarterly report on August 27 after the market close. The coronavirus pandemic has sparked a boom in PC demand due to the massive shift to remote work at many companies across different industries. In addition, educational institutions have also switched to distance learning solutions. Worldwide PC shipments rose 11.2% in the second quarter, according to IDC. At the same time, Hewlett Packard came out on top with a market share of 25%.
Dell will release financial results for the second quarter on August 27 after the market close. Growth in global PC demand should also have a positive impact on Dell’s quarterly results. In addition, the company has released a new Chromebook designed for remote working. Dell is also one of the world’s leading providers of cloud data center servers, which are in high demand due to the shift to remote work.
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