Market Commentary - October 25, 2021

Wall Street stocks eased off their peak on Friday, with the S&P 500 slipped 0.11% after having logged an all-time high a day earlier. The Nasdaq Composite dropped 0.82%, weighed down by weak tech stocks including Snap which it plummets by 26% after warning of reduced advertising revenue. Both Alphabet and Facebook also suffered losses, falling 3% and 5.1% respectively.

European stocks rose on Friday on a surge in technology stocks, strong earnings from France’s L’Oréal and a broad boost to sentiment provided by a surprise interest payment from the Evergrande Group. The Euro STOXX 50 added 0.8% to close at a weekly high and logged its third consecutive week of gains, while France’s CAC 40 rose 0.71% and outperformed its European peers as L’Oréal’s share price surged due to the strong results.

Elsewhere in Asia, Shanghai shares rose on Monday, led by environmental protection stocks on China’s measure to achieve carbon neutrality, while property firms fell by 2.9% after a report said the government would roll out a pilot real estate tax in some regions. Meanwhile, HK’s Hang Seng index rose marginally by 0.1% to 26,150.24 before the morning close.

Brent crude, the oil benchmark, settled up 1.1% to $85.53 a barrel, remaining close to its highest level in three years. On the other hand, gold jumped to their highest level since 7th Sept on Friday before giving back about half of its earlier gains into the close, settled at $1793 as lack of clarity over first Fed rate hike fueled its upside momentum. The dollar index fell 0.2% as appetite for riskier assets increased after it touched a one-year high in September but has dropped roughly 0.7% this month.

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Figure 1 (Source: IS Prime) XAUUSD Daily : Lack of clarity by the Fed on monetary policy saw inflow seeping in risk adverse gold.

Headliner to Review
  • The Flash Germany Services PMI Activity Index came out to be 52.4 vs. 56.2 in September, which is the lowest value in the current period of growth stretching back to May. There was further evidence of supply chain issues spilling over to services.
  • UK retail sales volumes fell by 0.2% in September 2021, following an upwardly revised 0.6% fall in August. Despite the fall in September, volumes were 4.2% higher than their pre-coronavirus pandemic February 2020 levels.

Headliner to Watch

  • The US CB Consumer Confidence Index id due to release in tomorrow, expected to be 108.4 compared to 109.3 from the previous month.

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Authors:
Antony Tan
Kerry Man