Market Commentary – July 13, 2021

Kevin Jock

13th July 2021

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.


Figure 1 (Source: IS Prime) EURMXN Daily : Mexican Peso settles at a 16 month high against the Euro following a surprise central bank rate rise resulting on the currency offering an attractive carry against developed counterparts.

Headliner to Review

  • Business confidence in Australia has faltered two consecutive months since it’s peak back in May. The survey conducted attributed the negative sentiment largely as a result of rising COVID-19 cases in NSW and the subsequent initial lockdown where business owners bear the brunt of social distancing and restrictions measures.
  • China released better than expected trade balance figures at 333B whilst 271B was expected. Despite the fading government expenditures, the economy continues to power through beyond the recovery.
  • BOE Governor Bailey is set to hold a surprise press conference about the Financial Stability Report today.

Headliner to Watch

  • US CPI figures is expected to remain elevated at 0.5% for the month of June. Significant volatility is expected should figures releases deviate from consensus, especially ahead of Fed Chair Powell’s testimony later in the week.
  • The RBNZ is expected to keep cash rates unchanged but may adjust wording in their outlook. Whilst sustained inflation and maximum employment is still an uncertainty currently, it’s very clear achieving these targets is not a “considerable time” away as previously forecast.

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Antony Tan
Kevin Joc