Market Commentary - September 22, 2021

Posted by Kevin Jock on Sep 23, 2021 3:24:30 AM

Global stock markets on Tuesday clawed back losses from the heaviest sell-off in months as investors bet that policymakers would step in to prevent the fallout if Evergrande defaulted. On Wall Street, the Nasdaq added 0.2% for the day, having declined 2.2% the day before. In terms of S&P 500, the index dropped 0.1% at the close, having gained as much as 0.8% in morning trading in New York session.

In Europe, STOXX500 closed up 1% following the steepest dive in nine weeks. Travel & leisure, media, mining and energy stock led gains, while Dax rebounded from its lowest level since late July and the FTSE 100 ended the session 1.12% higher.

The Chinese market fell on their first day of trading this week after a public holiday as concerns built in global markets over the Evergrande incident. But the loses were not as heavy as feared, since the Shanghai Composite Index retraced majority of its losses before the morning close. The HK stock market is closed for a public holiday.

Ahead of FOMC, the U.S. dollar index remained docile. Gold closed back above 1,774 and bitcoin back to the 42,000 level. Meanwhile crude oil settles just below $71, digesting offsetting prospects of demand recovery and supply increases from OPEC.

Market Commentary - September 21, 2021

Posted by Kevin Jock on Sep 21, 2021 9:18:54 AM

Wall Street added to the global fall in equities on Monday as the liquidity crisis of Evergrande shook benchmarks in major financial centres. The S&P 500 fell 1.7%, marking its worst day of trading since May as the sell-off hit the entire market, with just 50 stocks in the index finishing the day in the green. The Nasdaq Composite slid 2.2%, while the VIX index, a well-known gauge for fear, hit a high of 28.8 (its highest level since May) before retreating to 25.7.

Across the Atlantic, all major European indices were down on Monday, with the STOXX50 dropping by 1.7% weighted down by sliding commodity prices and in turn the mining sector itself. A bigger-than-expected jump in producer prices last month threatened ongoing quantitative easing prospects with the DAX diving 2.3%. But most importantly, the blue-chip German index began trading on Monday with an increase in the number of constituents to 40 from 30.

Elsewhere in Asia, Japan’s Nikkei the latest to be caught up in the global sell-off sparked by Evergrande, with the main indices down more than 2% at one point on Tuesday’s morning. Hang Seng slipped as well, with the benchmark sinking to its lowest since Oct 2020 in morning trade to 23,771.46 before gradually recovering above 24,000 by midday break. Mainland Chinese stock markets are closed for the mid-autumn festival and will reopen on Wednesday.

Crude oil declines to $70.50 during U.S. session as risk-off appetite prevailed but is set to recover amid Asia following reports from production facilities along the Gulf of Mexico unable to resume until next year resulting from Hurricane Ida’s damage. A remark expected to be reinforced by U.S. inventory data looking to decline by more than 3m bbl last week.

Despite growing risk-off sentiment, the U.S dollar held steady whilst gold rallied to $1,764. Surprisingly, bitcoin continues to slide hitting as low as $40,200 intra-day on lackluster support.

Market Commentary - September 20, 2021

Posted by Kevin Jock on Sep 20, 2021 9:39:06 AM

US stocks fell on Friday to their lowest level in almost a month, as investors grappled with signs of slowing global economic growth and the implications for monetary policy, as the Fed committee will meet on Tuesday to shed light on the fate of the bond-buying program, with market consensus believe they will begin to phase out the stimulus as early as November. The S&P 500 index dropped by 0.91% on Friday, its lowest point in four weeks, while Nasdaq also dipped by 0.9% on the day, with both indices falling for the second consecutive week. On the other hand, The US Congress plan to consider legislation in this week to extend the debit limit as failure to do so might plunge the economy into a recession and lead the country to default on its payment obligations.

In Europe, the STOXX 600 index fell 0.9% on last Friday, finishing the week down 1% to reflect the cautious mood on Wall Street. Both the FTSE 100 and DAX dropped 0.91% and 1.03% respectively. However, the European travel shares rallied on Friday as UK media reports suggested the government would ease restrictions and quarantine rules in time for the school half-term break. Shares in the British Airway owner IAG were nearly 5% higher at the market close in London.

The performance of the Asian market is mixed, with both the Nikkei 225 and KOSPI indices up by 0.58% and 0.33% respectively, during the morning close. While the Hang Seng index fell by more than 3.8% at the morning closure, led by the share of Evergrande, which plunged over 15%, extending losses as investors take a dim view of its business prospects with a fast-approaching deadline for payment obligations this week.

The EURUSD falls another 35 pips to settle at 1.1725 following leaked data last Thursday from the ECB which illustrated unpublished inflation forecasts depicting the central bank’s intention to initiate interest rate raises within two years. Meanwhile a 14bn short-term funds injections by the PBOC on Friday saw the USDCNH rally to above the 6.47 level. A slowdown in retail sales due a recent resurgence and the looming debt crisis from Evergrande have regulators worried.

Crude retreated to $72 after capping two consecutive weeks of advances fueled by supply restrictions as Hurricane Ida stifled America’s oil refinery sector alongside contagion from natural gas prices spurring prospects of fuel switching. Nevertheless, as OPEC intends to bolster supply increase in the coming months, Iraq have communicated the likelihood of prices being around $70 in Q1 of next year.

Elsewhere, gold fluctuated but still steadied itself around $1,754 by sessions end after Thursday tumultuous tumble. Bitcoin drifts lower to below $46,000 despite announcements by Wall Street’s biggest trading companies like Jump Trading, GTS and Jane Street in stepping up their crypto divisions.

Market Commentary - September 17, 2021

Posted by Kevin Jock on Sep 17, 2021 10:51:31 AM

US shares slipped on Thursday after stronger than expected data on American retail sales raised expectations that the Fed would soon begin reining in its stimulus efforts. The blue-ship S&P 500 and Dow jones indices both declined by nearly 0.2%, while Nasdaq retraced its earlier move lower and ended the day up 0.1%. As consumption accounts for about 70% of US economic output, so, retail sales data are scrutinized by many Wall Street traders.

Stocks in Europe fared better than those on Wall Street, with STOXX 600 benchmark closing up 0.4%, encouraged by the continent’s travel and leisure sector that jumped 3.4% after the low-cost carrier Ryanair raised its traffic growth outlook. The FTSE 100 is nearly flat, closed up by 0.16%, while CAC 40 rose by approximately 0.6%.

Shanghai stocks fell in the morning session of Friday, with coal companies leading the declines as the country’s environment ministry said China plans to include more cities in its 2021 winter air pollution campaign, with the index lost 0.6% to 3585.71. On the other hand, the HK benchmark rebounded after posting its lowest close in 10 months the day before, up by 0.4% after the morning close.

The dollar held near three-weeks highs against a basket of major currencies on today after retail sales boost, which made the EURUSD hit a three-week low of 1.17505 and currently traded at 1.17748. Similarly, gold prices also plunged by 2% to settle in 1753 due to the dollar strengthening, which eased investor interest in the precious metal.

Market Commentary - September 16, 2021

Posted by Kevin Jock on Sep 16, 2021 10:21:23 AM

Wall Street rebounded on Wednesday to regain lost ground on previous days as rising energy prices tempered investors pessimism over the global economic recovery alongside better-than-expected manufacturing data from the Federal Reserve of New York. Blue chips outperformed with the S&P500 advancing 0.9%, Nasdaq too rallied 0.8% whilst Dow Jones yielded 0.6%.

In Europe, stocks on Wednesday slipped in general as utilities fell on Spain’s move to cap energy bills, while luxury shares continued to weaken on worries about a slowing Chinese economy, as data showed that China’s factory and retail sectors faltered in August with output and sales growth hitting one-year lows following fresh COVID outbreaks in Fujian province. The benchmark STOXX 600 was down 0.8% and Spain’s IBEX lost 1.7%, the most among regional indexes.

In Asia, HK’s Hang Seng index dropped 1.8% in its third consecutive session of falls in today’s morning session, while the CSI 300 index of mainland Chinese stocks slid 1%. The debt-laden Chinese homebuilder Evergrande hired restructuring advisers to help it through a liquidity crisis after its monthly sales almost halved from June to August.

Whist crude received a boost from Hurricane Ida shutting down U.S. refineries, prices continued to surge to $72.50 as contagion from an energy crunch in natural gas across Europe and the UK ahead of winter. Concern arose following stockpiles filling at a slower pace than expected in 2021 as Russia restricts supply in suspicions of geopolitical tension.

Market Commentary - September 15, 2021

Posted by Kevin Jock on Sep 15, 2021 11:11:14 AM

Wall Street indices dropped on Tuesday. The S&P 500 closed the New York session down 0.57%, with bank stocks the worst performing sector on the blue-chip index, while the Nasdaq slid 0.4%. The lower-than-expected US consumer price figures warmed investors to the view that the Fed would have more time to remove crisis-era stimulus.

The European stocks ended flat on Tuesday, with banks and luxury shares leading the declines as optimism over cooling US inflation growth in August proved to be short-lived. Both the FTSE 100 and CAC 40 fell 0.49% and 0.36% respectively.

Elsewhere in Asia, the Japanese shares on today retreated from the peaks, as investors took profits after a strong rally over the last two weeks and Chinese regulatory concerns dragged SoftBank Group, with the Nikkei dropped 0.52%. Furthermore, Macau casino stocks shed $16bn on today, as the local government opened a 45-day public consultation on revising the gaming law, which is expected to step up scrutiny of operators in the world’s biggest gambling hub. Shares of Sands China tumbled 29% and Wynn Macau fell 28% in HK trading on Wednesday.

On the other hand, Brent crude settled up 0.1%, ending a strong two-session rally. The dollar index was little changed on Tuesday, while GBPUSD pairs weakened 0.2% to $1.381, and the euro fell less than 0.1% to $1.18025.

Market Commentary - September 14, 2021

Posted by Kevin Jock on Sep 14, 2021 10:14:24 AM

US equities recovered on Monday, rallying back from earlier losses to break a five-day losing streak. The S&P 500 finished the day 0.2% higher while the Nasdaq has failed to regain positive territory, dipped by nearly 0.1%. Financials was among the top-performing sectors in the S&P 500 index on Monday, up by 1.1%.

The same pattern was repeated in the European market, whereas the financial stocks led the indices higher, which helped STOXX 600 benchmark closed up 0.3% in yesterday, ending five sessions of continuous losing streaks. London’s FTSE 100 advanced 0.6%, as did DAX.

In Asia, Japan’s Nikkei hit a more than 31 year high on today, with cyclical stocks rising the most. The indices touched 30,795.78, its intraday high since August 1990, before ending the morning session up 0.38% at 30,562.42. In China, the blue-chips fell as it was dragged by real estate and financials after the country’s most-indebted developer warned of a risk of a cross-default, with the CSI 300 index fell 0.3% at the end of today’s morning session.

Brent crude jumped to nearly $74 a barrel, the strongest price since early August following a bullish forecast by Opec in its monthly report as oil demand in 2022 was now projected to reach 100.8m barrels a day, supported by a steady economic outlook in all regions. On the other hand, the greenback inched higher in yesterday after logging its best week in three on last Friday, with the EURUSD fell back under $1.18.

Market Commentary - September 13, 2021

Posted by Kevin Jock on Sep 13, 2021 10:56:04 AM

US equities closed their worst week in nearly three months on last Friday as concerns about inflation dented optimism over continued central bank support for financial markets. The S&P 500 closed down 0.77% while Nasdaq fell 0.87%, representing weekly falls of 1.7% and 1.6% respectively, their worst performances since mid-June.

In Europe, As the ECB concluded their two-day governing council meeting, European benchmarks sought lower levels after the central bank concluded that quantitative easing will be shifted to “a moderately lower pace”, with the STOXX 600 benchmark closing down 0.3% for a weekly fall of 1.2%. ECB President Christine Lagarde confided investors, the move is in response to the “rebound phase in the recovery of the euro area economy is increasingly advanced”.

Elsewhere in Asia, Beijing’s regulatory clampdown persist dragging the Hang Seng lower by over 2% since opening as tech stocks tumbles. A recently released report by officials have announced authorities are seeking to demerge Ant Group’s Alipay. In Australia, despite a 0.6% relief rally amid Monday’s session for the S&P200 after a tumultuous week of declines, extended lockdowns in the state of NSW and Victoria are expected to see unemployment rise from 4.6% to 5% in the coming months.

Crude oil rallies back above $70 as drawdowns continue. Estimates suggest inventories have declined approximately 30 million barrels thus far following Hurricane Ida two weeks ago as half of crude output along the U.S. Gulf of Mexico remain shuttered with returning to operations being unclear.

Market Commentary - September 10, 2021

Posted by Kevin Jock on Sep 10, 2021 11:50:13 AM

US equity markets remain on struggle street with the S&P 500 recording its fourth consecutive day of decline, down 0.46%, the Nasdaq closed -0.25% and the Dow was -0.43%. Investors are seemingly conflicted by mixed data signals while uncertainties over the economic impact from the delta variant outbreak are restraining investors appetite for risk.

The Euro zone stocks bounced off sessions lows to end little changed on Thursday after ECB’s conference, with the pan-European STOXX 600 index ended largely unchanged, as it had dropped 1.5% over the past two days on fears of a more hawkish than expected ECB. UK’s FTSE 100 led losses among regional indexes with 1% drop.

In Asia, Shanghai stocks witnessed their biggest weekly gain in seven months and closed in today, after US president and the Chinese counterpart’s candid conversation, with the Shanghai Composite Index gained 0.3% to 3,703 points. HK shares closed high on Friday as well, the Hang Seng index rose 1.9%.

Bitcoin continues to fluctuate around $46,000 as investors digest implications of El Salvador’s adoptions, whilst gold inches higher to $1,794. The US dollar index slid as Russia’s rubble and China’s renminbi take headlines. USDRUB heads towards an intermediate support line at 72.60 as the Bank of Russia is expected to raise rates on Friday for its fifth consecutive time. Hawkish endeavours are in response to annual inflation reaching 6.7% last month, beyond the central banks 6.5% target. USDCNH is set to settle at it’s highest in 3 months amid improving relations between US – China as President Biden reported reached out to President Xi, vowing to hold regular communication channels and get relations back on the right track.

Crude oil fell below $68 following an opaque announcement from Beijing’s National Food and Strategic Reserves Administration alluding to the release of millions of barrels of oil into the domestic refinery market. The move was predicated on the basis that it would “ease the pressure of rising raw material prices”.

Market Commentary - September 9, 2021

Posted by Kevin Jock on Sep 9, 2021 10:25:17 AM

Global stocks fell on Wednesday as investors anticipated the unwinding of ECB’s stimulus measures that have prop up markets throughout the pandemic. The S&P 500 index dropped 0.1%, while Nasdaq fell 0.6%. Declines were broad-based, with cyclical sectors such as financials and energy falling alongside technology stocks.

The cautious mood in the US followed declines across Europe as well, with the Europe-wide STOXX 600 index closed down 1.1% for its largest fall in three weeks. DAX suffered its worst day since mid-July, dropping nearly 1.5% ahead of today’s meeting at ECB. FTSE 100 and the CAC 40 ended the session lower by 0.75% and 0.85% respectively.

In term of today’s Asian markets, it declined in general with the HK Hang Seng index, South Korea’s Kospi 200 and Japan’s Topix dropped 2%, 1.8% and 0.7% respectively. In China, markets soured after Fitch mentioned that the Chinese home builder Evergrande, the world’s most indebted property developer, could default on its financial obligations.

Elsewhere, Brent crude rose 1.3% as the oil benchmark pushed higher by US producers struggling to get back to business after Hurricane Ida swept through Guld of Mexico. Gold prices held near two-week lows on today, pressured by a stronger US dollar, which in turn leads to the decline of EURUSD as it approaches the monthly low of around 1.1794. Bitcoin price fluctuated around $46,000 after El Salvador’s incident, as president Bukele steps in to fix the rollout snags through a stream of Twitter messages, providing guidelines to the users.

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