Market Commentary - October 11, 2021

Wall Street equities and government bonds slipped on Friday after weaker than expected non-farm employment change, raising concerns over a rocky recovery. The S&P 500 index fell 0.19% on the day but still ended the week 0.8% higher after lawmakers agreed to lift the US debt ceiling temporarily. Elsewhere, the Nasdaq declined 0.51%. Despite weaker jobs growth, headline unemployment still lowered to 4.8% and with markets focused on tapering, improving joblessness would bring hawkish expectation more forward.

A volatile session saw European benchmarks end lower on Friday, though mirroring the U.S. still marked their best week in two months as fears soaring inflation subsided. STOXX 50 index which had fallen as much as 0.5%, only briefly reversed the earlier losses after the data, while FTSE 100 ascended slightly by 0.25%.

In Asia, Japan’s Nikkei 225 index rose for a third straight session on Monday, as a sharp decline in the yen boosted exporters and a drop in COVID-19 infections supported investor sentiment. The index climbed 1.57% to 28,488.95 by the mid-day break. Meanwhile, the Hang Seng index of HK jumped nearly 2% as well. However, the Australian shares slipped as tech stocks fell, while heavy losses in casino operator Star Entertainment’s shares further weighed on the ASX 200 index.

The Turkish lira edged up from a new record low on Friday after rumors that President Erdogan is about to fire his central bank governor for the fourth time in less than three years, with the currency dropping about 1% to 8.96 against the US dollar. On the crypto front, price of bitcoin pushed up to around $56,000 as of today, while gold price remains pretty much flat at $1,756.

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Figure 1 (Source: IS Prime) USDTRY Daily : Resolving door of central bank governors spurs lackluster demand for Turkish Lira despite comparatively high yields.

Headliner to Review
  • The US September Non-Farm payrolls rose just 194K versus the 490K consensus, which is a big miss. The details show private payrolls rose 317K while the number of government workers fell 123K. It is more likely a supply problem and not demand related as the competition for workers is intense and this will push up wages and increase inflationary pressures.
  • Canada’s economy added 157K new jobs last month, enough to put employment numbers back above where they were before the pandemic started. The jobs surge was more than twice as big as the 59.5K new jobs that economists were expecting.

Headliner to Watch

  • The ZEW index of German economic sentiment is due on Tuesday, expected to reach 26.5 compared to 31.1 from the previous month.
  • The US JOLTS Job Openings figures is also due to release, forecasted to reach 10.95M.

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Authors:
Antony Tan
Kerry Man