Market Commentary – August 31, 2021

Kevin Jock

31st August 2021

On Monday, Wall Street built on Friday’s momentum notching consecutive record highs responding to Federal Reserve Chair’s virtual speech at the Jackson Hole symposium. Despite cementing market expectations of tapering, Powell’s dovish undertone and clear distinction between tapering vs rate rises reduced fears of rashly pulling liquidity from beneath the prevailing bull market. The Nasdaq outperformed gaining 1.1% with S&P500 following suit at 0.5%. Dow Jones surprising unchanged.

Light volumes in Europe but nonetheless traded near record highs. Both STOXX50 and DAX30 eked out minute gains of 0.1% and 0.2% respectively. Meanwhile, UK markets were closed in observance of Summer Bank Holiday.

In Asia, China’s gaming crackdown saw the Hang Seng fall 1.1%. In the latest regulatory escalation, Beijing will be regulating the playing time of online video games for children. People under the age of 18 will only be allowed to play games between 8:00pm and 9:00pm on Friday and weekends. Banning kids from more than three hours of gaming per week. Elsewhere, both the S&P200 and Nikkei rallied throughout the session.

Hurricane Ida tore through the land of U.S. energy complexes boosting crude oil prices higher to above $69 yesterday. Ahead of the storm, 9 refineries were shut, accounting for as much as 13% of total U.S. capacity. Lack of major news events saw a quiet U.S. dollar session across the board. Gold drifted lower to $1,810 and bitcoin lower to $47,000 level.

Nasdaq-Aug-31-2021-05-25-39-64-AM

Figure 1 (Source: IS Prime) IDX.US.100 Daily : Dovish undertone on rate rises fuels subsequent tech rally to consecutive all-time highs.

Headliner to Review

  • US monthly pending home sales index came out to be short of expectations, as it declined by 1.8%, with all regions recorded year-over-year declines as the market may be starting to cool slightly.
  • German preliminary CPI figure came out to be 0%, pretty much in line with the forecasted value of 0.1%.

Headliner to Watch

  • OPEC meeting is due to be held on Sept.1 with the discussion of whether they should increase the oil output by 400,000 barrels per day as of the current moment that the members have different views regarding this matter.
  • US ADP non-farm employment data is forecasted to reach 620K, much higher than the previous actual figure of 330K.
  • The ISM Manufacturing PMI and its report is due to release in US, which could show input costs remain at elevated levels, while inventories continue to contract. Its forecasted figure is expected to soften from 59.5 to 58.5.

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Authors:
Antony Tan
Kerry Man
Patrick Powers