INFLATION EASED
According to the latest report from the Commerce Department, inflation in the U.S. moved closer to the Federal Reserve’s target in August, potentially paving the way for future interest rate reductions. The personal consumption expenditures price index (PCE), which the Fed closely monitors to gauge economic costs, rose by 0.1% during the month, resulting in a 2.2% 12-month inflation rate, slightly lower than July’s 2.5%. Core PCE, excluding food and energy prices, increased by 0.1% in August and showed a 2.7% rise from the previous year, while personal spending and income growth were lower than anticipated. The latest data does indeed show positive inflation trends, however, it is important to remark that there were still challenges from housing-related costs, with services prices rising by 0.2% while goods saw a decline of 0.2%.
ABOVE $65,000
Bitcoin has surpassed the $65,000 milestone, marking its highest value since early August. This surge in price comes ahead of an impending $8 billion Bitcoin options expiry scheduled for today. This event signifies the second-largest monthly occurrence for Deribit, the prominent cryptocurrency options exchange, with $5.8 billion in expiring options at stake. CEO Luuk Strijers has estimated that approximately 20% of the contracts are “in the money,” with call options outweighing put options. It is worth noting that the event could bring about significant market volatility, nevertheless, with a previous record of $14 billion in options contracts being observed before the Bitcoin halving in April. Moreover, as of 8:00 AM CST, Bitcoin’s value is above the $65,600 mark, and it welcomed the latest inflation data positively.
DIMINISHING IMPACT
The brokerage and banking company, Charles Schwab Corporation, has announced that it will be splitting some ETFs, with share prices between $40 and $103. This split, scheduled for October 11, has the purpose of lowering share prices, which makes it easier for financial advisors and smaller investors to include these ETFs in their portfolios. This move could attract more retail investors and increase demand for Schwab’s ETFs. Nevertheless, it is worth noting that although the strategy of stock splits has historically been used to generate interest and drive buying, seasoned experts suggest that the significance of these splits has diminished over time. In addition, some analysts have argued that these share splits are more of a superficial change and do not significantly impact investors, especially with the ability to trade fractional shares. Therefore, it remains uncertain how this move by Charles Schwab Corporation plays out in the market and whether it will indeed attract more retail investors to their ETF offerings.
INCREASE SUPPLY WORRIES
U.S. crude oil prices are facing a decline, marking the first weekly loss in three weeks. This drop is attributed to concerns over potential growth in oil supplies from Saudi Arabia, overshadowing China’s attempts to stimulate its economy. Despite escalating conflicts in the Middle East, prices have fallen as there have been no disruptions in oil production. Notably, there is still significant shut-in capacity of over 5 million barrels per day in the Middle East, creating uncertainty in the market. In addition to this, reports of Saudi Arabia’s commitment to increasing oil production later in the year have contributed to the oil price sell-off. Moreover, the postponement of planned output hikes by OPEC+ from October to December has led to speculation that these increases might be deferred once again due to the persisting low oil prices.
INTERNATIONAL NEWS
This week, Chinese stocks have experienced a big boost thanks to the government’s economic stimulus efforts. Following the Bank of China’s announcement the CSI 300 Index jumped by 16%, leading to a historic trading surge that overwhelmed the Shanghai stock exchange. Notably, this wave of buying activity renewed hopes of a potential turnaround in China’s struggling $8.9 trillion stock market, which has underperformed in recent years. In addition, it is worth noting that some investors are feeling a strong sense of fear of missing out the recent upward trend as Chinese markets will be closed for the Golden Week holidays. However, it is also worth remarking that despite some technical issues causing trading disruptions, trading volume hit record highs. Moreover, the rally also led to gains in Chinese stocks in Hong Kong, although some firms faced losses, notably quantitative hedge funds and Chinese bank stocks due to market shifts and the unexpected capital injection plans.
