Market Commentary – November 11, 2021

Kevin Jock

11th November 2021

Bigger than expected jump in consumer prices spurred a second straight day of declines on Wall Street as once again overshooting inflationary figures grab headlines. Both the S&P 500 and Nasdaq fell by 0.82% and 1.66% respectively. Heavily weighted constituent, Alphabet shares slid after an EU court upheld an antitrust ruling against the company.

European benchmarks continue to fluctuate near record highs on Wednesday following strong earnings from the media and energy sectors, while technology stocks fell as fears of increased competition weighed on popular online food delivery companies. Semiconductor maker Infineon slipped 1.2% even after beating quarterly sales estimates, as investors worried about global chip shortage. London’s FTSE100 ascended 0.91%, a 21-month high, whilst DAX managed to increase marginally by 0.17%

Coming into Asia, Japanese equities gained on Thursdays’ open, with investors selecting seeking undervalued stocks in comparison to their latest outlooks while concerns over impact of rising costs capped gains. The Nikkei 225 index rose 0.75% before mid-day close. On the other hand, China’s new Beijing Stock Exchange has approved applications from 10 companies to list shares on Nov.15, two months after president Xi Jinping announced the bourse for small and medium-sized firms.

Brent crude fell by nearly 3% on Wednesday after reports that U.S. inflation increased at the fastest rate in 30 years pushed the dollar higher, settling at around $83 per barrel. Gold price shot up to $1,870 an ounce on Wednesday, hitting a five-month high as the yellow metal has always been touted as an inflation hedge. Meanwhile, China’s Yuan weakened after overnight data of U.S. CPI, trading at 6.399 per dollar prior to market open on Thursday.

image_2021_11_11T05_31_17_292Z

Figure 1 (Source: IS Prime) XAUUSD Daily : Gold rallies 5th consecutive day positioning higher on the back of surprising U.S. inflation data.

Headliner to Review

  • The US Labor Department reported CPI jumped 6.2% from a year ago, the monthly increase was 0.9%. Both were above economists’ estimates. The core rate, which excludes volatile food and energy prices, gained 4.6% year-over-year, also the most in more than 30 years.
  • US commercial crude oil inventories increased by 1M barrels from the previous week, below forecasted figure of an increase of 1.6M.

Headliner to Watch

  • US Preliminary UoM Consumer Sentiment index is due to release on Friday, expected to be 72.5 compared to 71.7 from the previous month.

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Authors:
Antony Tan
Kerry Man