Market Commentary - September 28, 2021

The US equity markets are mixed, with investors showing caution ahead of a potential government shutdown at the end of the week. The S&P 500 index closed down 0.28%, while the Nasdaq fell 0.52%. The Dow Jones Transportation Average, seen as an economic bellwether, rose 0.9%. Two top Fed officials on Monday warned that failing to raise the US debt ceiling would have catastrophic consequences as Republicans in the Senate blocked a bill to increase the borrowing limit and stave off a government shutdown.

In Europe, the STOXX 600 slipped 0.2% as declines in technology and healthcare stocks offset gains in its energy subsector, as higher interest rate expectations tend to hurt growth-focused stocks. Nevertheless, the German shares hit 10-day highs as the federal election outcome reduced the chances of a left-wing coalition forming a government, with the DAX rose 0.27%, leading gains among regional indexes.

Chinese shares rose on Tuesday, led by real estate stocks, after the PBoC (Chinese central bank) pledged to protect consumers exposed to the housing market, while Hong Kong gained as property and tech stocks rebound. The Hang Seng index added 1.5% to 24,561.35 at the end of the morning session and the CSI300 index rose 0.4%.

Brent crude price continued to rally on Monday, as it topped at $79.82 a barrel, its highest level since Oct 2018. US output has been curtailed by damage from Hurricane Ida, while a European gas shortage has boosted expectations of rising oil demand. On the other hand, GBPJPY grinds higher past 152 in yesterday, amid mixed catalysts, rising to a two-week high, with the BoE governor’s sustained support for a rate hike before tapering.

Figure 1 (Source: IS Prime) GBPJPY Daily: Such currency pair has been rallying for the past four days, refreshing a fortnight high the previous day.

Headliner to Review
  • US Durable Goods Orders increased by 1.8% in August from -0.1% previous. The reading was well above market expectations pointing to a 0.7% growth and also marked a notable rebound from the figures in previous month. Excluding transportation, new orders increased 0.2%, while excluding defense, orders unexpectedly jumped 2.4% during the reported month.

Headliner to Watch

  • US pending home sales statistics is expected to rise by 1.1%, compared to a contraction of 1.8% in the previous month.
  • The newest Crude Oil Inventories figure will also be announced on Wednesday, with the previous week of having a reduction of 3.5M barrels.

 

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Authors:
Antony Tan
Kerry Man