Respite on Wednesday was temporarily as Nasdaq resumed declines yesterday. Dovish reassurances from the Fed Chair Jerome Powell during FOMC failed to stifle growing caution on China’s regulatory crackdown, the spread of delta variant and mixed corporate earnings. Though the S&P500 held its ground alongside Dow Jones surprisingly gaining 0.3% amid weaker than expected macro data in GDP and unemployment claims. Bad news is good news as it delays the central from tighten monetary policy. Elsewhere, benchmarks in Europe rose as investors drew comfort on sentiment data from the European Commission, illustrating record levels unseen since 1985.
In Asia, the Hang Seng suffered similar price action, down 1.5% thus far intra-day. On Wednesday night, the China Securities Regulatory Commission held a conference call with global and Chinese executives, seeking to ease risk-off sentiment after Beijing imposed tough restrictions on private education companies. Despite regulators showing they’re not tone-deaf to international concern, ultimately as decision-making arises in the upper echelons of the Communist Party, its clear further tougher policies will follow.
Australia’s S&P200 opened weaker with Sydney extending a month-long lockdown for at least another four weeks after failing to contain an outbreak in delta. Daily cases in the city alone continues to post triple digits. Likewise, with the Tokyo Olympics well underway, the Nikkei tumbles 1.7% as Japanese officials sound alarm over the city’s record-breaking coronavirus cases for 3 consecutive days.
Crude oil rose above $73.50 following an industry funded report from American Petroleum Institute revealing declining U.S. inventories implying economic reopening will weather COVID-19 flareups. The U.S. dollar loses ground among majors after FOMC, whilst gold surges $20 to $1,827. And Bitcoin fluctuates around the $40,000 level.
Ahead of the FOMC meeting scheduled Wednesday, Wall Street edged higher across the board alongside continuing strong corporate earning releases. Both the S&P500 and Dow Jones gained 0.2% whilst Nasdaq managed to eke out 0.1%. Since alluding that discussions surrounding tapering is on the table, markets have surprisingly shrugged off hawkish sentiment from Federal Reserve members. Though unease may be on the horizon, as rhetoric on the timing, pace, and composition of tapering divide opinions within the central bank.
In Europe, China contagion saw broad-based benchmarks initially gap lower on open. A late session rally resulted in a mix bag with the CAC40 and ES35 ending above ground whilst the DAX30, STOXX50 and FTSE100 settled in negative territory.
As regulators in China tighten their iron grip on Chinese behemoths, with education companies most recently in their crosshairs, both the Nikkei and Hang Seng extended declines from Monday. The former down 0.7%, the latter selling sharply as much as 5.7% intra-day. Beijing’s rein on private enterprises lately come amid concern over exacerbating inequality, systematic financial risk and challenges to their authority. Meanwhile the S&P200, remained flat as the state of NSW is likely to extend Sydney’s month-long lockdown by another four weeks with daily cases recording 174 on Monday.
After briefly pushing past $40,000 early in the week, bitcoin retreated down to the $37,000 level as Amazon swatted away the possibility of accepting token payments this year. The cryptocurrency had originally surged following a job-listing by the tech giant for a “Digital Currency and Blockchain Product Lead”.
Crude oil held stead just above $72 as investors digest implications between OPEC’s agreement last week and the delta variant impacting global demand recovery. The U.S. dollar index remain to fluctuate within a tight range and gold slides below $1,800.
Wall Street slid over growing warnings signs that global economic growth may have peaked following China’s weaker than expected quarter GDP release. The rapid spread of the Delta variant further threw a wrench in the works. Nasdaq underperformed and S&P500 down 0.7% and 0.3% respectively. European benchmarks suffered a similar fate amid a sea of red. STOXX600, CAC40 and DAX30 posting 1% declines. Meanwhile the FTSE100 slipped 1.1% after two members of the Bank of England speculated quantitative easing may have to be tapered as soon as next month tailing overall global sentiment among central banks. Largely resulting in transitory inflation being more persistent than previously anticipated.
Despite President Biden, issuing a serious caution of U.S. companies still doing business in Hong Kong, the Hang Seng rose 1%. The administration fears majors’ banks and multinationals do not fully comprehend China’s influence on the islands changing landscape and the ensuing risk. Elsewhere, Beijing announced plans to exempt companies going public in Hong Kong from cybersecurity regulatory approval. The BOJ reiterated their stance to remain accommodative as the nation continues to survive through various states of emergency. Price action on the Nikkei remains mute.
Confidence in the Singaporean dollar is being tested following a growing COVID-19 cluster from a karaoke club infects another 42, adding to the 56 from the previous day. The highest daily infection rate in more than a year, just weeks before the country is expected to reach their next vaccination hurdle and easing of restrictions. USDSGD hit a 9-month high to settle above 1.3500. The U.S. dollar rose against majors, gold settled above $1,829 and crude fell below $72.
Bitcoin retreated as low as $31,472 yesterday after renewed interest from central banks for a digitally backed money. Fed Chair Jerome Powell weighed suggesting a central bank digital currency would undercut the need for private alternatives such as bitcoin. Meanwhile ECB President Christine Lagarde has approved an investigation phase in developing such as asset.
Exceptionally stronger than expected CPI data whipsawed Nasdaq to end the session unchanged whilst both the S&P500 and Dow Jones slipped 0.4% and 0.3% respectively. Despite the high inflation reading, muted price actioned seems to reflect investor sentiment has moved on. Focusing on prospective growth in light of the spread of the Delta variant and a possible slowdown in China’s rebound ahead of GDP data scheduled to release Thursday. Just last week, the PBOC had cut reserve requirement ratios spurring speculation as to why the central bank had started to ease monetary policy again.
In Europe, benchmarks eased off recent highs with the STOXX down only 0.1%. Asia opened mixed but continued the overnight theme of muted volatility. The S&P200 rose 0.2%, Hang Seng gapped down 0.1% and Nikkei up slightly at 0.1%.
Continuing civil in South Africa saw the Rand depreciate 2.1% on Tuesday. Following the jailing of Former President Jacob Zuma last week after he refused to attend an inquiry over corruption during his nine-year tenure, his supporters rampaged through the streets, ransacking and looting. Initial police response had been lethargic such that the military had to be subsequently called in after 19 deaths. Meanwhile, the U.S dollar index produced one of their best single day gains for a month. Gold stalled at $1,807 and bitcoin fell lower to settled at $32,000.
Crude oil rallied above $75 after the International Energy Agency commented yesterday that without an OPEC deal to raise production, the oil market will “significantly” tighten “as demand rebounds from last year’s COVID-induced plunge…with OECD industry stocks now well below historical averages”. The agency further noted that demand is forecasted to grow fast during the 3rd quarter of 2021 on the presumption a rapid reopening of global economies.
Solid second quarter earnings underpinned Wall Street’s rally yesterday despite a looming U.S. inflation report release, expected to stay elevated and Federal Reserve Chair Jerome Powell’s testimony this week. Set to outline initial discussions among members regarding quantitative easing tapering. The S&P500 closed 0.4% higher whilst the Nasdaq notched another all-time high, up 0.2% by sessions end.
In Europe, broad-based benchmarks managed to post positive returns in light of the rapid spread of the delta virus as majority of new daily cases comprise largely of the variant. The situation further compounded by ECB President Christine Lagarde whom speaking with the Financial Times remarked “I’m not under the illusion that every six weeks we will have unanimous…acceptance because there will be…some slightly different position”. Alluding to a split in opinions among ECB members in relation to the new inflation target of 2% and the new guidance tolerating transitory price pressures above that level.
Mixed performance thus far in Asia, the S&P200 retreated following Sydney extending lockdown restrictions, whilst the state of NSW records another 89 new cases. The Hang Seng, outperformed rallying 1% and Nikkei remained unchanged.
Crude oil snapped a 2-day rally to settle just above $74. Combination of the delta variant spreading global alongside OPEC ending last weeks supply talk without an agreement for August has added to overall market uncertainty. Both Saudi Arabia and United Arab Emirates have started locking in customer orders for the preceding month suggesting little chance of a breakthrough.
The US dollar remained steadied on Monday, gold at $1,806 and bitcoin fluctuates around $33,000.
Sea of red on Thursday over rising concerns about prospects for the global economy following worrying signs the Delta variant could hamper recovery efforts. Especially as low vaccinations are still prevalent in some parts of the world and central banks considering tapering monetary policy support. The severity of the variant strain became clearer after Pfizer requested the U.S. to authorize a 3rd booster shot after a study in Israel saw the vaccines efficacy decline from 93% to 64% in 6 months. The S&P500 closed 0.9% lower, Dow Jones retreating 0.8% and Nasdaq down 0.7%. Tensions between the US and China also flared after the White House added another 10 Chinese entities to their economic blacklist over human rights and high surveillance violations.
Despite the ECB’s formalising wording surround the central banks 2% inflation target allowing for temporary price pressures to exceed the ceiling, European benchmarks still faltered ending the session the negative territory. CAC40 and STOXX50 tumbled 2% and 2.2% respectively. The UK economy is re-opening from restrictions but still the FTSE100 slipped 1.7%. Renewed Brexit spat between Brussels and London also grabbed headlines as the EU obliged Britain to fork out £40.8bn whilst Downing Street refuted the figure to be between £35bn – £39bn. In Asia, the Nikkei and Hang Seng tempered overnight risk-off sentiment with “buy-the-dip” mentality though the S&P200 followed through, down 0.7% thus far.
Crude snapped a 2-day decline to rebound 1.5% above $73 on increase inventory deficit. Nonetheless, oil is set to post their worst week since April after a breakdown in alliance between OPEC members and United Arab Emirates on top of the delta strain clouding overall outlook. Softer optimism drove demand in the greenback against majors and bitcoin settles around the $33,000 level.
Another spate of state of emergency in Japan saw a reluctance in risk appetite in the Nikkei as the benchmark fell 0.6% intra-day. The renewed measures will take effect from next week until August 22nd, overlapping Tokyo’s already dire Olympic games. On Wednesday, the country reported 920 new cases of coronavirus where the delta variant contributed 14%. Likewise, the S&P200 slipped 0.1% as various suburbs in Sydney had their lockdown restrictions extended following 38 new local cases. The Hang Seng set to record their 8th consecutive decline with technology underperforming from peripheral risk arisen from Didi’s IPO debacle alongside China’s tech crackdown.
FOMC meeting minutes spurred Wall Street higher across the board as Federal Reserve members withheld a timeline in tapering off quantitative easing concerned of an uncertain economic outlook. Especially as supply bottlenecks leading to labour market imbalances and persistently high transitory inflation remain visible. Both Nasdaq and S&P500 records another all-time high, whilst the Dow Jones rose 0.6%. In Europe, the STOXX and DAX rose 0.8% and 1.5% respectively, regaining the previous days lost ground. In contrast, Spain underperformed ending the session down as the country battles with the highest COVID-19 rate within the bloc.
Gold rallied above $1,800 following Fed minute remarks and so too did the US dollar index, gaining across the board. Crude oil nose dived another 2.3$ ahead of OPEC-JMMC meeting today. With talks broken down, fears that rogue nations will increase production in a game of prison dilemma is rising. Elsewhere bitcoin fluctuates above $33,000.
Ahead of the FOMC meeting minute release today, Wall Street cyclicals snapped their winning streaks as both the S&P500 and Dow Jones retreated in bear territory whilst Nasdaq bucks the trend to end 0.4% higher as Amazon led the charge. Investors are bracing for potential hawkish sentiment among central bank members. Likewise, European benchmarks followed suit, point downing for the session. The French CAC lost 0.9%, STOXX lower by 0.5% and the DAX slipping 1%.
In Asia, the Japanese Nikkei seesaws between the opening price despite an anticipated announcement from Japanese Prime Minister Suga, set to unveil a stimulus package mounting to atleast $180 bn ahead of the 2021 Japanese general election in October. The prevailing party suffered over the weekend as Tokyo elections saw the coalition lose a majority of its seat. As of recent, Suga has been criticised over his administrations failings in handling the virus and a vaccine rollout schedule mired with delays. Meanwhile, the S&P200 regained all of yesterday’s losses whilst the Hang Seng remained unchanged.
Crude oil slumps 3.5% on Tuesday to below $74 as investors continue to digest the ramifications of the dispute between Saudi Arabia and the United Arab Emirates. With negotiations deteriorated, the failed expected monthly incremental supply increase of 400,000 barrels a day has seen oil hit 6-year highs. However, as infighting prolongs, a lack of unity among OPEC members would entice peripheral nations, dependent upon oil revenues, to take it upon themselves to supply the market independently.
The US dollar index rose in line with overall markets’ hawkish sentiment with gold posting their 5th consecutive advance to settle above $1,765. Elsewhere, bitcoin oscillates between 34,000 – 35,000.
Wall Street surged to end the week off on a high after a perfect balance in labour market data illustrated a economy well underway in its recovery but not beyond a pace that would raise concern from the Federal Reserve. With non-farm employment change beating expectations offset by a higher unemployment rate, temptations that the central bank may rein in on quantitative easing have subsided. Both the S&P500 and Nasdaq gained 0.8% and the Dow Jones higher by 0.2%.
Whilst talks of hawkish monetary endeavors are rife in US markets, the ECB exudes a different tone in maintaining their dovish stances, reflecting the different pace in recovery. Friday saw mixed results, the DAX outperformed eking out 0.2% though the remaining benchmarks ended the session lower.
In Asia, sentiment on the Hang Seng was dampened after China opened a cybersecurity probe on the newly IPO ride hailing giant Didi. Authorities have accused the company of “seriously violating laws on collecting and using personal information” and ordered their app to be taken off domestic app stores. The Hang Seng fall to an 1.1% intraday low, with the Nikkei following suit, down 0.5%, mired with COVID-19 and a catastrophic Olympic event of their own. Elsewhere, the S&P200 gapped higher on open on expectations beating retail sales but have since retraced.
OPEC remains in the spotlight as negotiations continue to stall on Friday on raising oil production for the remainder of 2021. The deadlock entirely brought upon by the United Arab Emirates, whom are demanding better productions terms for themselves The group will reconvene on Monday via videoconference in hopes to hash out a deal on the propose 400,000 barrels increase each month between August and December else they risk unravelling the cartel. Surprisingly despite this, crude oil held steady, closing just above $75.
Higher unemployment rate drove demand out of the U.S. dollar against counterparts. Gold rallied back above $1,785 and bitcoin fluctuates between 34,000 – 35,000.
Wall Street cyclicals rose after solid US manufacturing figures alongside better than expected unemployment claims were released. The S&P500 up by 0.5% followed by Dow Jones higher by. Nasdaq underperformed ending the session negative territory with concerns that should the Federal Reserve start trimming bond purchases, leading to yield sensitive tech stocks being hardest hit. Meanwhile, Biden’s administrations push towards a global tax system nears a historic deal albeit with opposition from EU members Ireland, Hungary and Estonia.
European benchmarks rose on Thursday, uplifted by energy companies benefiting from rising oil prices and improving sentiment by ever-increasing manufacturing PMI data. The STOXX rose 0.6%, though the FTSE outperformed at 1.25% following dovish remarks by BOE Governor Bailey on monetary policy who stood confident that inflationary pressure currently seen would prove temporary in nature. In Asia, the Hang Seng tumbled 1.6% dragged lower by tech after re-opening from a public holiday. In contrast the S&P200 rallied 0.3% and the Nikkei eked out 0.1%.
Crude oil rose as high as 3.6% intraday before settling just above $75 after squabbling among OPEC-JMMC members on Thursday. Before negotiations broke down, the cartel had anticipated to boost output by 400,000 bbls a day each month from August through to December. Last minute opposition from the United Arab Emirates now put the intended agreement in dangerous. The nation is arguing for own production baseline to be increased allowing the producer to pump hundreds of thousands of extra barrels a day. Should a deal not be reached today, current production arrangements would remain in place until 2022.
US dollar index rose on quantitative easing trimming prospects. Gold recorded it worst month since 2016 after the Federal Reserve surprised investors by bringing their first rate rise forward despite transitory inflation rhetoric. Bitcoin back down to 33,000 as hype over the cryptocurrency dies down.