Market Commentary – August 27, 2021

Kevin Jock

27th August 2021

US stocks wavered on Thursday ahead of Friday’s Jackson Hole speech from the Fed. Both the S&P 500 and the Nasdaq indices closed down by 0.6%, with four-fifths of the stocks declined. Investors will be watching on Friday for clues from central bank policymakers as to when the Fed may begin removing its crisis-era stimulus measures.

European shares ended lower on Thursday after the release of German consumer sentiment data in which it declined amid rising COVID-19 cases. The STOXX 600 index fell 0.3%, while both the DAX and FTSE 100 dropped by 0.4%.

In Asia, China shares rose on Friday after investors took comfort in the central bank’s biggest weekly cash injection into the banking system since February, CSI300 index rose 0.5% while the Shanghai Composite index gained 0.6%. At the same time in Japan, the Nikkei index slide by 0.36%, in line with Wall Street’s declines overnight, on caution around prospects for an earlier than expected tapering from the Fed.

Elsewhere, oil price slipped, with Brent crude down 1.6% at $71.07 a barrel, while the price of gold remains steady and closed at around $1795. The price of precious metals will most likely react based upon what Powell says and how his statements are reflected dollar strength or weakness as well as yields in US debt.

Picture1-1

Figure 1 (Source: IS Prime) XAUUSD Daily : Gold price remained silent in this week, waiting for breakthrough during the Fed speech.

Headliner to Review

  • US second quarter preliminary GDP expands by 6.6% vs. 6.7% expected. Such increase reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic.
  • The newly released US unemployment claims figure has increased slightly compared to previous week, increased by 4,000 to 353K.

Headliner to Watch

  • Fed Chair Powell is due to speak about the economic outlook at the Jackson Hole symposium. His speech will give an indication on both the pace of the tightening and which data the Fed will be keeping an eye on to measure the recovery.

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Authors:
Antony Tan
Kerry Man