Market Commentary - September 23, 2021

Global stocks advanced on Wednesday, as fears around Evergrande eased and the US Fed provided more details on its timetable for lifting interest rates. The S&P 500 index closed 0.95% higher after Fed chair Powell signalled the US central bank could start withdrawing its stimulus program as early as November, while the Nasdaq indices also rose 1%. New projections show a majority of Fed officials expect interest rates to rise at least three times in 2023, and a growing number expect an earlier rate rise in 2022.

European shares rose on Wednesday after Evergrande said it would make a coupon payment on its domestic bonds, offering relief to investors. STOXX 600 index rose 1%, extending Tuesday’s bounce after its worst session in two months, with commodity-linked stocks and banks leading gains, while both the FTSE 100 and CAC40 ascended by 1.47% and 1.29% respectively.
In Asia, Chinese stocks rose on Thursday morning, led by semiconductors and consumer staples, while the Hang Seng index added 0.7% to 24.388.52 at the morning closure. Property-related firms in HK led gains on catch-up trade, as the market was shut for a public holiday on Wednesday.

Oil price steadied after a two-day gain, with US crude stockpiles shrinking to the lowest level since 2018 and tightening the market as it faces a global energy crunch ahead of the crucial winter demand period, with the crude oil climbed more than 1.6% and settled above $72. On the other hand, EURUSD takes the bids to renew intraday top above 1.1700 after the currency pair dropped to the lowest since August 20 the previous day.

Figure 1 (Source: IS Prime) EURUSD Daily: Price of the currency pair bounced back after it touches the low on 20 August 2021.

Headliner to Review
  • The BoJ (Bank of Japan) kept its policy settings unchanged at their Monetary Policy Meeting in yesterday. The short-term interest rate has been held steady at -0.1% and the 10-year bond yield remained at 0%, as most economists expect BoJ to leave stimulus unchanged through 2022.
  • US crude oil inventories decreased by 3.5 million barrels from the previous week, and it has been decreasing consecutively in the past seven weeks, due to hurricane Ida-related disruptions.

Headliner to Watch

  • The monthly US Flash Manufacturing PMI is expected to reach 60.7, down from the previous month’s actual figure of 61.1.
  • German ifo Business Climate Index is forecasted to reach 99, fell from 99.4 in last month.

 

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Authors:
Antony Tan
Kerry Man