The new week in the financial markets is off to a quiet start, with barely any interesting fundamentals expected today.
The most important thing on the economic calendar today was the Ifo business climate survey for October in Germany. At 97.7 this report was slightly below the forecast. This marks four consecutive months of decreases in this particular index, suggesting that the EU’s strongest member is not having the best of times.
One other fundamental event currently driving the markets has to do with the coronavirus pandemic. China, the point of origin for the pandemic, is once again experiencing outbreaks. The official numbers don’t seem too alarming - just 43 cases yesterday, but the government is still going to enforce strict lockdowns in 11 provinces because of the latest outbreaks.
Over the course of the pandemic, China has remained as the only major economy which goes into full lockdowns every time Covid-19 resurfaces. The latest round of lockdowns happened over the summer and immediately caused an unwelcome drop in all important economic indicators from China.
Thus, with the announcement of lockdowns for essentially half of China, now financial experts around the world expect the world’s second-largest economy to continue shrinking, which in turn will have negative consequences for the global economy as well.
In terms of the stock market, today US indices are going to trade slightly higher on the continuation of the earnings season. Facebook is due to report today, followed by other tech giants tomorrow. The company’s share value has dropped by 15% over the past two months due to various controversies plaguing the company.
Meanwhile, the commodities market remains very attractive to investors. Crude oil, which was out of favor for a very long time, continues to recover in price due to increases in demand. According to an estimate by Goldman Sachs, the demand for crude oil is now back at its pre-pandemic levels.
As a result, Brent crude prices have reached $85.20, while the WTI brand is trading at $84.45 per barrel.
