By Geoffrey Smith and Ana Beatriz Bartolo
Investing.com – Jerome Powell has gained an important ally in his campaign to be reappointed to the Fed’s presidency for a second term. The president is in trouble trying to put some order in the chaotic withdrawal from Afghanistan.
In Brazil, fiscal and political risk are impacting investments in the country.
Share app companies’ shares, known as gig economy, are suffering after a California court overturned the exemption from treating independent contractors the same as employees. The European economy cooled sharply in August.
Meanwhile, oil is recovering after China said there was no community broadcast of Covid-19 for the first time since July.
Here’s what you need to know about the financial markets on Monday, August 23rd.
CHECK: Investing.com’s Complete Economic Calendar
1. Yellen’s support for Powell’s second term at the Fed; european economy cools down
Jerome Powell’s chances of being named for a second term as chairman of the Federal Reserve appear to have increased dramatically.
A Bloomberg report over the weekend said the Treasury secretary – herself a veteran of the central bank – told White House advisers that she supports one, which has been a valuable ally in allaying fears as the new government laid out its vast spending plans.
The leak may give Powell more confidence to signal the start of phasing out bond purchases at the Fed symposium later this week.
However, comments on Friday from the head of the Dallas Fed, who said the Fed needs to be flexible on stimulus as pandemic risks get out of control again, slightly reduced the chances of an immediate start to tapering, analysts said. .
The eurozone economy, on the other hand, weakened more than expected, but continued to expand at a rapid pace in August, judging by figures released by IHS Markit.
The preliminary fell to 59.5 from an all-time high of 60.2 in August, with the latest wave of Covid-19 still not enough to sway business or consumer activity.
2. Local and external risks impact investments in Brazil
The country’s fiscal and political risks, along with a more cautious global scenario, create an adverse outlook for local investments, as investors opt for more security, with high and a lower ao, despite good corporate fundamentals. Calculations by economist Livio Ribeiro, from Ibre/FGV, indicate that, based on Brazil’s economic fundamentals, especially balanced ones, the US currency could be worth R$4.20, almost 30% less than the range of R$ 5.30 / R$ 5.40 current, according to Leaf of St. Paul.
However, local instability makes exporting companies choose to keep the dollar abroad, as well as motivating the departure of foreign investors, who in the last 12 months have withdrawn almost US$ 70 billion from the country. The higher dollar directly affects the increase in inflation, via the import of products and commodities quoted in dollars, such as oil and animal protein. Higher prices force the Central Bank to raise the rates, making the national debt more expensive, and to attract investors willing to finance it, it is necessary to raise the interest rate even more, creating a vicious cycle.
CHECK: Brazilian stock quote
3. Biden calls on airlines as allies push for an extended deadline for evacuation from Afghanistan
The Taliban reportedly rejected suggestions that the deadline for withdrawing US forces and their support staff from Afghanistan could be extended.
US President Joe Biden is under intense pressure to do more after the chaotic scenes that accompanied the collapse of the Afghan government and the return of Islamic militants to power last week. Over the weekend, he called in 18 planes from six civil airlines to help transport civilians to safety.
UK Prime Minister Boris Johnson – also the target of much criticism last week – will ask Biden to extend the deadline at a G7 summit on Tuesday in order to evacuate as many Afghans facing retaliation as possible. Taliban after working to support Western forces for the past 20 years.
Taliban spokesmen told Reuters on Monday that they had not received any formal requests for an extension.
CHECK: Quotation of the main global indices
4. Shares should open on a high
US equity markets are expected to open higher later, with a measure of risk appetite returning around the world after China reported no new Covid-19 cases in the country for the first time since July.
At 8:11 am, , and were rising 0.42%, 0.32% and 0.27% respectively. The , an index fund that measures the performance of the main Brazilian stocks in New York, advanced 0.4%.
Stocks that will likely be in focus later include sharing app experts like Uber (NYSE:) (SA:), Lyft (NASDAQ:), and DoorDash (NYSE:), after the California Supreme Court ruled on Friday that the measure exempting them from the obligation to treat drivers as employees is unconstitutional.
CHECK: US stock quote on pre-market on Wall Street
5. Oil rebounds on the best news from China
Crude oil prices rebounded after losing about 8% last week due to concerns about Covid-19 and its impact on the supply-demand balance. Prospects brightened over the weekend after China said there was no community broadcast of Covid-19 for the first time since last month.
At around 8:16 am, futures contracts were up 2.82%, at $63.91 a barrel, while the currency had gains of 2.97%, at $66.66 a barrel.
CHECK: Quotation of the main global commodities
The rally follows a report on Friday that Crude Oil futures fell to its lowest level in nine months last week.
Over the weekend, Israeli Prime Minister Naftali Bennett said he will pressure Joe Biden at a meeting on Thursday to scrap plans for talks on lifting sanctions against Iran for its resumption of high uranium refining. quality, which brings him closer and closer to being able to make nuclear weapons.