Market Commentary – July 27, 2021

Kevin Jock

27th July 2021

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.


Figure 1 (Source: IS Prime) HK50 Daily : Hang Seng tumbles as much as 5.7% intraday as contagion from China’s regulatory crackdown on behemoth industries continue.

Headliner to Review

  • Unexpectedly, the German ifo business climate gauge declined from 101.7 to 100.8. Of businesses survey, they cited worsened sentiment largely stemming from an increase in COVID cases in July alongside continuing supply congestion.

Headliner to Watch

  • Consumer confidence in the U.S. is expected to decline from 127.3 to 123.9. As the effects government stimulus early on from the year fade, the initial euphoria is expected to normalise.
  • Quarterly CPI data out of Australia is anticipated to increase from 0.6% to 0.7&. For the past 3 months, inflation has remained at elevated levels but could quickly unwind amid latest lockdowns.

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Antony Tan
Kevin Joc