Markets ended last week on a token gain. Friday's strong sell-off was driven by U.S. labor market data. The unemployment rate fell to 3.5% from an expected 3.7%. Investors' fears are that a stable labor market with falling unemployment will give the Fed additional "confidence" in the cycle of aggressive tightening.
The broad S&P 500 index failed to register a new low for the year despite selling pressure. This is largely due to its oversold condition to date. Levels around 3600 remain key for the index.
The meter crossing below this psychological zone may lead to further downward impulses. The catalyst for such accelerations to the downside could be the September consumer price report, which will be published on Thursday. In addition, Fed members are expected to speak during the week. In these statements, investors will be looking for signals on the future tightening path. Recent comments by Fed officials suggest that the turmoil in financial markets will not deter them from acting to lower inflation, which is now more than three times their target.
Petrol
Oil prices rose this week as OPEC+ announced a 2 million barrel per day cut in oil production. This comes amid Europe's ongoing concerns over energy supplies stemming from Russia's incursion into Ukraine. West Texas Intermediate crude oil prices have risen with more than 10% over the past five days.
What's coming up this week
Inflation data will be published on Thursday (13.10.). A further elevated inflation reading on Thursday will bolster the case for sticking to the Fed's plan to firmly ground the economy.
The minutes of the Fed's last meeting on Wednesday will provide more information on where inflation stands and the outlook for the future path of interest rates.
On Friday, the quarterly reports of major banks such as JPMorgan Chase, Wells Fargo, Citigroup and Morgan Stanley will be published - they are due to report their third quarter earnings before the opening bell on Friday. Analysts expect results to show a decline in net income after market volatility affected investment banking activity.
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Disclaimer:
This information is marketing material and does not present investment consultation, advice, investment research, or investment recommendation. The information is valid as of the issue date of the marketing material and may alter in the future. The value of the units in the collective investment schemes changes over time and it could be higher or lower from the value at the time of the investment. No profits are guaranteed and risk exists for the investors to not receive the full amount of their investments. Investments are not guaranteed by a guarantee fund which is created by the country or another form of guarantee. Information on the performance of the financial instruments in the past is not a reliable indicator for future performance. Therefore, it is recommended for investors to acquaint themselves with the Prospectus and the Document with key information for investors before making a final investment decision. You can find these documents in Bulgarian on the website of Compass Invest - www.compass-invest.eu, and you can request and get a free paper copy at the office of the management company at: Sofia, 19 George Washington Str, floor 2, during every business day from 9 am to 5 pm. Future results are subject to taxation, which depends on the personal situation of each investor and may change in the future. A summary of the rights of the investors is available at the following hyperlink in Bulgarian: here. The mutual funds, which are managed by Compass Invest, are actively managed without following an index. We would like to inform you that Management Company Compass Invest can make a decision to terminate the offering of funds on the territory of the Republic of Bulgaria. The investment in units of mutual funds, in addition to benefits, carries certain risks like: liquid, operational, interest, currency, and political risk, as well as macroeconomical risk, currency risk, concentration risk, etc. The full information about risks can be found in the Prospectus of the respective fund.
Risks:
Despite benefits, the investment in shares of mutual funds brings certain risks like:
1) Market risk with the following components: a) interest risk related to a decrease of the value of the investment due to a change of the interest rates levels b) currency risk related to a decrease of the value of the investment, denominated in a currency which is different from BGN and EUR c) price risk related to a decrease of the value of the investment in the case of unfavorable changes of the market’s prices;
2) Credit risk – related to a decrease of the value of the position in the case of unexpected events with a credit nature which are related to the issuers of financial instruments, the counter side of exchange and OTC transactions, as well as countries, in which they operate;
3) Operational risk – from errors or flaws in the system of the organization
4) Liquidity risk – in case of forced sales of assets under unfavorable market conditions;
5) Concentration risk – in case of incorrect diversification of exposures to groups of related clients, from the same economic branch, geographic area, etc.
6) Position risk which is related to the change of price of a certain instrument in result of factors related to the issuer or in case of a derivative instrument – related to the issuer of the base instrument;
Additional information for the risks can be found in the Prospectus of the respective fund, which is available here: www.compass-invest.eu