Market Commentary – November 18, 2021

Kevin Jock

19th November 2021

Renewed concern over inflation and supply chain stemming from disappointing retailer earnings pushed Wall Street benchmarks lower. The Dow fell 0.58%, S&P 500 lost 0.26% and the Nasdaq dropped 0.33% to 15,921.57 points. Electric vehicle makers were broadly positive. Tesla and Canoo both gained 3.3%, the latter after forecasting it would start U.S. production sooner than expected.

European stocks closed at a record high on Wednesday, rising for the sixth straight session, as positive earnings reports helped overshadow worries that soaring gas prices were feeding into inflationary pressures. The Euro STOXX 50 closed nearly flat, while both CAC 40 and DAX reached all-time high once again, rose marginally by 0.06% and 0.02% respectively.

In Asia, Australian shares dropped on Thursday, with commodity and tech stocks weighing the most. The ASX 200 index was down 0.3% in the early morning session. Japanese equities eased on Thursday, with cyclicals and oil companies leading losses, after Wall Street’s rally took a breather on worries about inflation, with the Nikkei 225 index dropped 0.8% before the mid-day close. HK’s Hang Seng Index dipped by more than 1.3% at the morning close.

Price of gold bounces back from two days of losses to close at its highest level since June, reaching nearly $1,870 per ounce on the back of surprising UK CPI release. On the other hand, Sterling reached its strongest point against the euro since February 2020 on Wednesday, settling at 0.838 during yesterday’s close. At the same time, UK currency also rose to its strongest against the dollar for about a week, purchasing about $1.34.

image_2021_11_18T05_08_30_213Z

Figure 1 (Source: IS Prime) EURGBP Daily : Euro breaks lower against the Sterling following UK inflation figures hitting it’s highest level in almost a decade.

Headliner to Review

  • The annual rate of UK consumer price rises reached 4.2% in October, data on Wednesday showed, more than double the central bank’s target and exceeding economists’ expectations for a 3.9% increase.
  • The Canadian CPI rose 0.7% in October, the largest gain since June 2020. Prices rose in all major components on a year-over-year basis in October, with transportation prices (+10.1%) contributing the most to the growth in the all-item index.

Headliner to Watch

  • Monthly UK retail sales figure are due to release on Friday, expected to increase by 0.5% compared to -0.2% in the previous month. Another negative print in October would undermine any boost from hot inflation readings.
  • Core retail sales figure will release in Canada as well, forecasted to decrease by 1%.

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Authors:
Antony Tan
Kerry Man