Market Commentary - September 24, 2021

US stocks gained more than 1% on Thursday as investors appeared relieved about the Fed’s stance on tapering stimulus and raising interest rates, with both the S&P 500 and the Nasdaq rising 1.21% and 1.04% respectively. Among S&P 500 major industry sectors, energy was up 3.4% and financial stocks were up 2.5%, gaining the most ground.

European stocks rallied for a third day on Thursday as global sentiment improved on easing concerns about Evergrande, while comments from Bank of England (BoE) kept London shares under pressure. The FTSE 100 lagged regional indexes with a 0.1% fall after BoE said the case for higher interest rates appeared to have strengthened, while both CAC 40 and DAX ascended by 0.98% and 0.88% respectively.

China blue-chip stocks rose in Friday's morning session, led by consumer staple firms, while property indexes in mainland markets and HK slipped amid persistent concerns on Evergrande, with Evergrande HK shares finished the morning session down 7.12%. Around the region, the Hang Seng index remained nearly flat at the morning close while the Nikkei index was up 2.01%.

Oil prices continue to rally on Thursday, supported by growing fuel demand and supply concerns, with Brent crude up to $77.58 in yesterday’s market close. On the other hand, Turkey’s central bank unexpectedly cut its benchmark interest rate on Thursday by a full percentage point to 18%, which caused the Lira to tumble more than 1.5% following the decision, hitting an all-time low of 8.80 to the US dollar.

Figure 1 (Source: IS Prime) USDTRY Daily: The Turkish Lira has weakened as far as 8.808 against the dollar, near a record low of 8.88 touched in June.

Headliner to Review
  • The Fed meeting in this week concluded with a clear message in which their monetary policy in the US is about to become much tighter, through the phasing out of its stimulus program in November which is expected by the market. Fed chairman Powell has raised concerns about the debt ceiling during the meeting which he believes a US default could inflict severe damage to the financial markets.
  • The SNB (Swiss National Bank) has also announced to maintaining its expansionary monetary policy, by keeping the interest rate at -0.75% and remains willing to intervene in the FX market as necessary.
  • The Bank of England’s Monetary Policy Committee (MPC) judged that the existing stance of monetary policy remained appropriate at its meeting, by maintaining the bank rate at 0.1%.

Headliner to Watch

  • The German Federal Elections will commence in this Sunday. All the polls show that no single party is going to win a majority. Regardless of which party comes in with the most votes, the resulting negotiations are likely to be difficult and extended.
  • US Core Durable Goods Orders statics is expected to release in next Monday, with the previous figure of an increase of 0.8%.

 

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Authors:
Antony Tan
Kerry Man