Investing.com – Markets are up-not-up again. Futures on the S&P 500 opened today at 3395 points, successfully rallied to almost 3418 points, went into negative territory and returned to positive territory.
In the US, unpleasant data on retail sales for August came out – they are growing at a completely different pace than expected, and even the data of previous months are being corrected downward. That is, the economy, of course, is recovering – but not at the pace as expected.
At the same time, a record number of cases of coronavirus per day was recorded in the world yesterday, it reached 368 thousand.The previous record was less than 320 thousand, and it was set only four days earlier. However, these figures already make an impression on few people.
The results of the meeting of the Committee on Operations on Open Markets of the Federal Reserve System, which ended today, also did not make a great impression on the markets. The rate is expected to be unchanged, inflation estimates were slightly increased, from 0.8% to 1.2%, forecasts for a decrease in GDP and unemployment in 2020 were improved, and a slightly higher likelihood of rates growth starting from 2023 was announced. That is, everything is in line with the recent statements of the head of the Fed, Jerome Powell. Overall, such a guarantee of stability could indicate a serious increase in risk appetite – if not for the upcoming US elections. By 21.20 Moscow time, the S&P 500 index increased from a minimum of 3402.2 points by 3425 points.
More fun on the oil market: futures for a barrel of Brent by 19:00 Moscow time grew from $ 40.66 to $ 42.2. Crude oil stocks in the US, instead of the expected continued growth, fell sharply last week. Including commercial reserves in Cushing, for which an even greater increase was expected, also went into negative territory. In addition, it became known that in the United States due to hurricane Sally, production of more than a quarter of oil and gas was suspended, and a number of terminals were closed. In total, according to Rystad Energy, this could remove from the market from 3 million to 6 million barrels of oil.
“The number of infected people has been growing for a long time, but the markets have also grown. Until the US elections are held, there will be no benchmark for the markets. If the incumbent President Donald Trump wins, the markets will continue to swing, the Republicans always have more money in the economy. Plus there is a rule that the markets grow better in the second presidential term. In the case of the arrival of conservatives, as a rule, the rates rise more often. So if Joe Biden wins, the first reaction will be a correction, unless the Fed prints more money. However, both the money pumping and the growth of rates bring money – just in different ways, so in the longer term the market will grow anyway, “says Valery Pyatnitsev, director of strategy at Finam.
Everything is fine in Russia too. The Moscow Exchange index today dropped slightly by 0.19%, while the RTS index lost 0.15% altogether. The ruble is also without much movement – by 21.00 Moscow time, the dollar rate fell by 3 kopecks. up to 74.96 rubles.
What is happening is connected not so much with a technical correction, after a week of good growth, but with a reaction to new tax initiatives: the Ministry of Finance proposed to abolish a number of benefits in the oil and gas industry starting next year, increase the tax on the extraction of a number of fertilizers, non-ferrous metal ores and iron ore by 3.5 times, and also to increase the excise tax on tobacco products.
This, of course, is not at all like supporting business in order to eliminate the consequences of a pandemic. But everyone is already accustomed to the fact that against the background of falling oil prices in Russia, gasoline still becomes more expensive. It is the same here: in the end, according to Prime Minister Mikhail Mishustin, it turned out that “all sectors” should help the budget. “When it is difficult, everyone should take part in solving the problems facing the country, people. This is our deliberate policy, ”the prime minister said with communist frankness.
By the way, Rosstat said today that in August the non-resource sector of the economy again went into recession: in annual terms, the reduction in output for the month increased 3.3% to 4.1%. But, as you can see, the contraction of the economy should not interfere with the filling of the budget for solving more important tasks.
However, this sad news is unlikely to be able to absorb the market for a long time – and, according to Valery Pyatnitsev, the same applies to political risks: “I analyzed the connection between the dynamics of world stock markets and political events. The impact of political risk is very short-term and its impact is statistically negligible. Even at the start of World War II, markets were not only falling. Today we see local movements typical of the market in a state of long-term uncertainty. We are totally dependent on Fed policy, US elections and oil. That is, oil is still the main factor. If the price goes up, we will go up, if it goes down, we will go down. However, the quotes for a barrel are unlikely to decline and, perhaps, even grow by the end of the year – but this will become clear only after the elections. So for now, strategically speaking, you can forget about market movements, ”says Valery Pyatnitsev.
(Text prepared by Daniil Zhelobanov)