Market Commentary - June 4 2021

Posted by Kevin Jock on Jun 4, 2021 8:46:19 AM

Nasdaq led Wall Street lower on Thursday tumbling over 1% whilst cyclical heavy blupchip S&P500 slipped 0.4% and Dow Jones stood unchanged by sessions close. The asymmetric weakness comes amid data release by the UN Food and Agriculture Organization revealing food prices have surged by their highest margin in a decade in May, further fuelling inflationary concerns.

Expanding on a Trump-era blacklist policy, President Biden signed an order banning U.S. investment in 59 Chinese firms with ties to China’s surveillance industry or military. The ban will take effect one year from now, allowing U.S. American companies to divert holdings elsewhere.

Meanwhile, attempting to secure a bipartisan agreement, the President is prepared to drop his demands for a corporation tax hike to entice republican support for his $1tn infrastructure spending package.

European markets initially followed the U.S. lower but subsequently parred losses as services PMI data kept sentiment upbeat. The STOXX posted only a 0.1% loss after slipping as much as 0.8% with the CAC expressing similar price action. The DAX outperformed closing flat. Ahead of U.S. labour data today, Asia opened mixed. The S&P200 and Hang Seng tracked the U.S. on open whilst the Nikkei declined.

Crude oil is set to post 2 weeks of advances after a significant draw in inventories reinforced the OPEC+ meeting’s bullish outlook. The U.S. dollar was stronger across the board following a rung of optimistic data on Thursday whilst gold hit a 2-week low to $1,870. Elsewhere, the Turkish lira notches lower with USDTRY closing above 8.7000.

Since the PBOC’s intervention, the renminbi has declined 4 consecutive days losing 0.6%. The week has saw authorities raising foreign-exchange reserve requirement and express unfavourable rhetoric against the currency’s appreciation.

AUS200-Jun-04-2021-07-38-07-54-AM

Figure 1 (Source: IS Prime) AUS200 Weekly : Despite lagging among developed nations, Australia's benchmark is set to settle at all time highs by weeks end as the economy recovers from last years pandemic.

Headliner to Review
  • ADP Non-farm employment change far exceeded consensus. Expected was 645k, actual was 978k. Growth came largely from a boom in leisure and hospitality jobs as the industry continues to recover post lockdown. Likewise, a similar picture is painted in unemployment claims declining from 405k to 385k
  • ISM services PMI out of the U.S. grew beyond expectations from 62.7 to 64.0 for May. Respondents noted “business continues to improve” through “stimulus money, increased vaccinations, increase dining capacity and pent-up demand”.

Headliner to Watch

  • US non-farm employment change expected to increase from 266k to 645k with the unemployment rate declining from 6.1% to 5.9%
  • Labour market statistics out of Canada to worsen with 23.5k to lose their jobs in May and the joblessness rate to increase from 8.1% to 8.2%
  • Central bank authority figures Jerome Powell and Christine Lagarde is due to speak in a panel discussion titled “Central banks and climate change” at the Green Swan 2021 Global Virtual Conference.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Kevin Jock

Topics: Market Commentary

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