December 2. In focus: OPEC meeting and the Fed's «Beige Book»
At the end of yesterday's trading session, the US stock market fell sharply after US health officials announced the discovery of the first confirmed case of omicron, a strain of coronavirus, in the country.
What will affect the dynamics of the market today?
First, we should pay attention to General Motors, which announced yesterday the creation of a joint venture with South Korean Posco Chemical Co Ltd to build a plant in North America. The plant will process critical materials for batteries for the GM Ultium electric vehicle platform.
As you know, General Motors has recently decided to gradually switch to electric vehicles, and collaboration with South Korea will help the company take control of the supply chain. Analysts of the automaker expect that for the full year profit before tax will reach about $ 14 billion, which is higher than previously forecast (from $11.5 to $13.5 billion).
Further, the results of the two-day OPEC meeting will be of interest. Today, the cartel will meet to make a decision on production in January, after the participating countries agreed to gradually increase the supply on the market.
The Joe Biden administration, which has been pressing OPEC to increase production, said it could adjust the timing of the planned release of strategic oil reserves. However, only if world energy prices fall significantly.
The Federal Reserve's Beige Book was published last night. According to her thesis, the US economy continues to be under pressure due to supply chain disruptions, labor shortages and inflation. At the same time, enterprises managed to raise prices to compensate for price pressure against the background of high consumer demand.December 1. FED announced plans to accelerate taping
Chairman of the US Federal Reserve Jerome Powell said that at the December meeting of the Open Market Committee, the timing of the completion of the bond purchase program will be discussed. The regulator may complete the program several months ahead of schedule, given the good state of the economy, the shortage of workers in the labor market and high inflation.
Such a «hawkish» tone of Powell's comments took market participants by surprise, and also somewhat cooled the rally of US Treasury bonds. Stock indexes also rushed down: the S&P 500 index fell to 4,567.00, the Dow Jones fell to 34,483.72, and the NASDAQ – to 15,537.7.
Recall that in November, the Fed began to reduce $120 billion in monthly purchases of Treasury bonds and securities at a pace that would allow it to complete the winding down by mid-2022. Recently, an increasing number of Fed representatives have been advocating the end of asset purchases in the spring of next year. They are confident that this option will allow them to start raising key rates earlier, if the situation with rising inflation requires it.
Powell notes that the current inflation rate is twice the Central Bank's flexible target of 2%. And if earlier it was possible to apply the term «transitory issue» to high inflation, now this is no longer the correct definition for current levels.
Regards, ForexMart PR Manager