Market Commentary - October 5, 2021

Shares of big US tech companies slid on Monday, dragging the S&P 500 to its lowest close since late July, with the indices falling 1.3%. Facebook was among the five worst-performing stocks on S&P 500, declining 4.9% as its Instagram and WhatsApp services suffered outages. Nasdaq dropped 7.5% from record highs last month tumbling 2.1% yesterday.

Europe painted a similar landscape hit by worrying signs of inflation and in turn elevating bond yields. The FTSE 100, CAC 40 and DAX all dropped by 0.23%, 0.61% and 0.79% respectively. Banks and luxury stocks lost out on fears of a slowdown in China due to their fresh COVID-19 restrictions, with both Kering and LVMH fell 1.3% and 1.4% respectively.

In Asia, HK shares opened higher as energy firms gained on the back of stronger crude oil prices, whilst Chinese real estate stocks remained subdued over the on-going Evergrande debt crisis. The Hang Seng Index rose 0.3%, settling at 24,112.64 amid morning session. However, the Japanese stocks tumbled to one-month lows on Tuesday as spikes in oil prices fueled concerns of rising inflation and monetary tightening. The Nikkei 225 fell 2.77% to 27,846.84 during the morning closure.

Brent crude rose 2.56% to nearly $82 a barrel for the first time in three years on Monday close, after Opec+ resists call to accelerate production, while rising natural gas prices has boosted demand for crude. The US dollar edged back toward a one-year high versus major peers on Tuesday ahead of the key payrolls report, with the safe-haven greenback also supported by an equity sell-off that spread from Wall Street to Asia. The dollar index rose 0.16% to 93.98. Bitcoin hovered just below $50,000 with gold just under $1,770.

image_2021_10_05T07_23_20_091Z

Figure 1 (Source: IS Prime) IDX.JP.255 Daily : Growth stocks drag the Japanese Nikkei to a one month low on inflation fears.

Headliner to Review
  • Monday’s meeting saw OPEC announce that it would stick with a plan formulated this summer of only gradually increasing oil production by 400,000 barrels a day each month, despite warnings of a growing supply deficit, as members declined to accelerate plans to increase crude production.
  • In Spain, the level of its unemployment fell by 76,113 people. It’s seventh consecutive month decline, with industry, agriculture and construction now register few unemployed than before the pandemic.

Headliner to Watch

  • The Reserve Bank of New Zealand announces monetary policy this Wednesday, with the markets pricing in an 80% probability of a rate hike this week, from 0.25% to 0.50%.
  • The US ADP’s private sector job statistics is estimated to be 425K, up from 374K from the previous month.

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Authors:
Antony Tan
Kerry Man