Market Commentary – June 14, 2021

Kevin Jock

14th June 2021

With Australia and Hong Kong observing national holidays, the Japanese Nikkei was mute, but manage to notch a modest 0.2% lead intra-day. Likewise, global futures took the opportunity to position in bull territory ahead of each market’s respective opens. Wall Street ended last week with the S&P500 and Nasdaq edging out 0.1% higher after shrugging off Thursdays’ CPI data and was further buoyed by growing American consumer confidence. Despite improving economic data, the inflation rhetoric has seemingly run its course with investors looking towards the FOMC statement due this week.

Elsewhere, the G-7 summit concluded with French President Emmanuel Macron welcoming the U.S. back to the “club”. President Biden announced the summit as a win with headline topics including committing 1bn vaccine doses to poorer countries and holding China accountable for human rights violations.

Friday saw European benchmarks extend their all-time high, whilst the FTSE100 has finally broken out of its tight consolidation with confidence, gaining 1% by sessions end. This despite Prime Minister Boris Johnson expecting to delay the final measures of easing on Monday by another 4 weeks in hopes to the Delta variant strain, first discovered in India.

Crude rose 75 cents as the newest reports from the IEA echoed statements by OPEC, revealing oil demand is set to exceed pre-pandemic levels by the end of 2022. Though consumer demand contracted a record 8.6m bbls a day in 2020, thus far demand has recovered to 5.4m bbls per day on the back of a global vaccine roll-out and subsequent economies opening up. The only impediment, if vaccine distribution were to slow.

Bitcoin saw a rebound back to $39,000 after Elon Musk tweet out the viability of the cryptocurrency should 50% of electricity usage is sourced from clean energy. The U.S. dollar gained among a basket of majors whilst focus shifts towards the Aussie dollar this week particularly the Australia jobs data and Governors Lowe’s expected speech, as it continues to be wedged between 0.76 – 0.78.

UK100-1

Figure 1 (Source: IS Prime) UK100 Daily : Despite extending lockdown for another 4-weeks, the UK100 begins the price in the eventual re-opening of the economy alongside improving bilateral trade relationships following the G-7 meeting.

Headliner to Review

  • Monthly GDP out of the U.K grew by 2.3%, lower than the expected 2.4% but still higher than previous month 2.1%. The service sector expanded, inversing moving alongside the slow easing of social restrictions.
  • Consumer sentiment across America rose further than anticipated from 82.9 to 86.4 on improving economic outlooks and moderating inflation expectations.

Headliner to Watch

  • EU industrial production looks to expand faster at 0.4% from 0.1% for the month of May.
  • Monetary Policy Meeting Minutes scheduled to be release tomorrow following no changes on recent policy announcement.

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Authors:
Antony Tan
Kevin Jock