Market Commentary - September 17, 2021

US shares slipped on Thursday after stronger than expected data on American retail sales raised expectations that the Fed would soon begin reining in its stimulus efforts. The blue-ship S&P 500 and Dow jones indices both declined by nearly 0.2%, while Nasdaq retraced its earlier move lower and ended the day up 0.1%. As consumption accounts for about 70% of US economic output, so, retail sales data are scrutinized by many Wall Street traders.

Stocks in Europe fared better than those on Wall Street, with STOXX 600 benchmark closing up 0.4%, encouraged by the continent’s travel and leisure sector that jumped 3.4% after the low-cost carrier Ryanair raised its traffic growth outlook. The FTSE 100 is nearly flat, closed up by 0.16%, while CAC 40 rose by approximately 0.6%.

Shanghai stocks fell in the morning session of Friday, with coal companies leading the declines as the country’s environment ministry said China plans to include more cities in its 2021 winter air pollution campaign, with the index lost 0.6% to 3585.71. On the other hand, the HK benchmark rebounded after posting its lowest close in 10 months the day before, up by 0.4% after the morning close.

The dollar held near three-weeks highs against a basket of major currencies on today after retail sales boost, which made the EURUSD hit a three-week low of 1.17505 and currently traded at 1.17748. Similarly, gold prices also plunged by 2% to settle in 1753 due to the dollar strengthening, which eased investor interest in the precious metal.

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Figure 1 (Source: IS Prime) XAUUSD : Increasing possibility of quicker tapering saw XAUUSD tumble as need for inflation hedge subsides.

Headliner to Review
  • The newly released Australian job report is rather downbeat, with the economy lost a massive 146.3K jobs in August, relative to the -80K consensus forecast. However, the employment rate is lowered to 4.5% against an expected 5%. A wave of lockdowns, mostly across New South Wales (NSW) and Victoria, are the likely culprits fueling the big employment losses.
  • The US retail sales for August was much stronger than expected, as sales increased 0.7% for the month against the estimate of a decline of 0.8%. Sales were strong when back to school shopping generally results in a pickup in activity, especially when schools prepared to welcome back students after a year of remote learning.

Headliner to Watch

  • The Canadian new federal election will commence on next Monday. The outcome is too close to call as the two main contenders (Trudeau and Erin O’Toole) are currently running neck-and-neck in opinion polls
  • The German monthly PPI is also due to release in Monday, with the previous figure of an increase by 1.9%.

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Authors:
Antony Tan
Kerry Man