Market Commentary - October 6, 2021

Surging energy prices intensified inflationary pressures on Tuesday, sending 10-year Treasury yields higher, whilst US equities rebounded on Wednesday following a woeful start to the week. The S&P 500 closed 1.05% higher, reversing losses tallied on Monday while the Nasdaq recovered 1.25%, after a temporary outage across Facebook’s platforms sent shockwaves across highly valued growth stocks.

Across the Atlantic, yields on the 10-year UK gilt rose to 1.08%, topping 1% for the first time since March 2020. Driven largely by the significant hike in natural gas price for November delivery. Meanwhile, a 3.5% jump in European banks and a rally in beaten down tech companies pushed the STOXX 600 up by 1.2% in yesterday’s market close. London’s FTSE 100 closed the day up 0.94%, while DAX ascended by 1.05%.

Across to Asia, Japan’s Nikkei 225 fell 1% to 27554.06 by morning market close, as modest approval ratings for Japan’s prime minister Fumio Kishida disappointed investors, with local media poll showed his approval rating at 45%. Much lower than his predecessor Yoshihide Suga’s administration when it came into power last year. HK stocks dropped on Wednesday as well, in line with other Asian markets as the Hang Seng Index lost 0.46% to 23,992.99 by the end of the morning session.

On the energy front, crude and brent oil continued their rallies, hitting a seven-year and three-year highs respectively by sessions end. The prevailing momentum in prices has helped push one measure of inflation expectations in the US to its highest level since June. Bitcoin price gained pace and cleared $50,000, considered an important psychological level, with institutions believing that interest in cryptocurrency is increasing on Wall Street despite its many controversies.

image_2021_10_06T06_49_56_853Z

Figure 1 (Source: IS Prime) CC.BTC.USD Daily : Bitcoin rallies 50,000 with 4 consecutive days of advances after renewed interest by main street institutions.

Headliner to Review
  • During the RBA (Reserve Bank of Australia) monetary meeting, it has been decided that the cash rate will remain unchanged at 0.1% and they will continue to purchase government securities at the rate of $4 billion a week until at least mid-February 2022.
  • The US ISM Services PMI registered 61.9%, 0.2% point higher than the reading of 61.7% in August. The September reading indicates the 16th straight month of growth for the services sector, which has expanded for all but two of the last 14 months.

Headliner to Watch

  • The US unemployment claims is forecasted be reach 350K, down from 362K in the previous month.
  • The monthly German industrial production statistics is also due to release, which is expected to contract by 0.4%.

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
Kerry Man