Market Commentary - September 16, 2021

Wall Street rebounded on Wednesday to regain lost ground on previous days as rising energy prices tempered investors pessimism over the global economic recovery alongside better-than-expected manufacturing data from the Federal Reserve of New York. Blue chips outperformed with the S&P500 advancing 0.9%, Nasdaq too rallied 0.8% whilst Dow Jones yielded 0.6%.

In Europe, stocks on Wednesday slipped in general as utilities fell on Spain’s move to cap energy bills, while luxury shares continued to weaken on worries about a slowing Chinese economy, as data showed that China’s factory and retail sectors faltered in August with output and sales growth hitting one-year lows following fresh COVID outbreaks in Fujian province. The benchmark STOXX 600 was down 0.8% and Spain’s IBEX lost 1.7%, the most among regional indexes.

In Asia, HK’s Hang Seng index dropped 1.8% in its third consecutive session of falls in today’s morning session, while the CSI 300 index of mainland Chinese stocks slid 1%. The debt-laden Chinese homebuilder Evergrande hired restructuring advisers to help it through a liquidity crisis after its monthly sales almost halved from June to August.

Whist crude received a boost from Hurricane Ida shutting down U.S. refineries, prices continued to surge to $72.50 as contagion from an energy crunch in natural gas across Europe and the UK ahead of winter. Concern arose following stockpiles filling at a slower pace than expected in 2021 as Russia restricts supply in suspicions of geopolitical tension.

USOIL-1

Figure 1 (Source: IS Prime) SPT.CO.US Daily : Crude back above $72 following energy crunch contagion from Natural Gas.

Headliner to Review
  • The UK’s consumer prices index surged by 3.2% in the 12 months to August, the largest ever month-on-month increase since records began in Jan 1997. The surge was likely to be a temporary change and the UK government’s “Eat Out to Help Out” program last year may have accentuated the jump.
  • The Canadian monthly CPI rose 0.2% in August, down from a 0.6% increase in July. Prices rose in seven of the eight major components in August, with transportation prices contributing the most to the all-item increase.

Headliner to Watch

  • The August US retail sales will be released later in the day, with both the headline and core rates expected to have risen somewhat, but to have stayed in negative territory.
  • The Eurozone’s final CPIs for August are also coming out, with the market consensus of a increase by 3% compared to the previous figure of 2.2%.

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Authors:
Antony Tan
Kerry Man