Market Commentary – November 1, 2021

Kevin Jock

1st November 2021

Late session rally retraced early losses for Wall Street on Friday, posting the best monthly performance of the year. This despite disappointing results from Apple and Amazon reviving questions about labor shortages, supply squeezes and, in turn, persistently high inflation. The final 30-minute surge left both the S&P500 and Nasdaq up 0.2% and 0.3% respectively, notching new record highs.

Meanwhile, European counterparts ended flat as a jump in major financial stocks driven by surging bond yields offset weakness in high dividend yielding sectors and commodity companies caused from a slide in oil and metal prices. The Euro STOXX 50 index closed 0.39% higher, both the FTSE 100 and DAX dropped slightly by 0.16% and 0.05% respectively.

Asia opened with the Nikkei 225 hitting a one-month high on Monday after Prime Minister Fumio Kishida’s ruling party held on a majority in a parliamentary election. While the shares of Japanese investment bank Nomura fell almost 8%, its biggest daily decline since March, after they reported worse than expected earnings due to legacy deals completed more than a decade ago. Elsewhere, China’s blue-chips stocks fell on Monday as recent COVID-19 outbreaks in the country weighed on consumption, tourism and the broader service sector.

Oil prices dropped on Monday as China’s release of gasoline and diesel reserves eased concerns over tight global supply, with Brent crude trading at around $84.2 per barrel. Gold was up on Monday morning amid Asia however, a strengthening dollar could potentially cap the yellow metal’s gains. On the other hand, EURUSD sidelined around 1.1550, following the heaviest daily fall since mid-June as it is heading into Monday’s European session. Having witnessed the ECB failed attempt to hide hawkish intentions.

image_2021_11_01T07_51_47_395Z

Figure 1 (Source: IS Prime) IDX.HK.50 Daily : As the world open’s up, Hong Kong continues their zero-covid policy losing investor confidence as the Hang Seng declines 5 consecutive days.

Headliner to Review

  • Business activity growth in the Chicago area accelerated in October compared with the previous month but prices and logistics remain a challenge, with the Chicago Business Barometer rose to 68.4 from 64.7 in September following two months of declines.
  • The newly released Canadian Real GDP rose 0.4%, led by increases in accommodation and food services, retail trade and transportation. The continued easing of public health restrictions and further reopening across the country increased demand across many close contact service industries.

Headliner to Watch

  • The Reserve Bank of Australia (RBA) is due to hold its November policy meeting on Tuesday, with the market believe they will raise the key rate to 0.25% in November 2022 from the current record-low 0.1%.
  • Both the German and French Final Manufacturing PMI are forecasted to be 58.2 and 53.5 respectively.

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Authors:
Antony Tan
Kerry Man