Market Commentary - July 16, 2021
Wall Street slid over growing warnings signs that global economic growth may have peaked following China’s weaker than expected quarter GDP release. The rapid spread of the Delta variant further threw a wrench in the works. Nasdaq underperformed and S&P500 down 0.7% and 0.3% respectively. European benchmarks suffered a similar fate amid a sea of red. STOXX600, CAC40 and DAX30 posting 1% declines. Meanwhile the FTSE100 slipped 1.1% after two members of the Bank of England speculated quantitative easing may have to be tapered as soon as next month tailing overall global sentiment among central banks. Largely resulting in transitory inflation being more persistent than previously anticipated.
Despite President Biden, issuing a serious caution of U.S. companies still doing business in Hong Kong, the Hang Seng rose 1%. The administration fears majors’ banks and multinationals do not fully comprehend China’s influence on the islands changing landscape and the ensuing risk. Elsewhere, Beijing announced plans to exempt companies going public in Hong Kong from cybersecurity regulatory approval. The BOJ reiterated their stance to remain accommodative as the nation continues to survive through various states of emergency. Price action on the Nikkei remains mute.
Confidence in the Singaporean dollar is being tested following a growing COVID-19 cluster from a karaoke club infects another 42, adding to the 56 from the previous day. The highest daily infection rate in more than a year, just weeks before the country is expected to reach their next vaccination hurdle and easing of restrictions. USDSGD hit a 9-month high to settle above 1.3500. The U.S. dollar rose against majors, gold settled above $1,829 and crude fell below $72.
Bitcoin retreated as low as $31,472 yesterday after renewed interest from central banks for a digitally backed money. Fed Chair Jerome Powell weighed suggesting a central bank digital currency would undercut the need for private alternatives such as bitcoin. Meanwhile ECB President Christine Lagarde has approved an investigation phase in developing such as asset.
Figure 1 (Source: IS Prime) UK100 Daily : Unlike developed counterparts, economic drag see's the FTSE100 oscillate between 7,000 - 7,200.
- Pace of recovery in the U.S. may have peaked with unemployment claims and industrial production posting figures weaker than expected. Jobless claims anticipated to hit 350K whilst 360K was announced. Production figures also only expanded 0.4% whilst 0.6% was expected.
- CPI figures out of New Zealand rose higher than expected at 1.3% a quarter compared to 0.7% expected. The significant increase largely a result of rising house prices as households took advantage of record low interest rates during the pandemic.
Headliner to Watch
- Retail sales out of the U.S expected to contract another -0.4% after the effects of the stimulus pay check dissipates from the economy.
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Topics: Market Commentary