Market Commentary – November 2, 2021

Kevin Jock

2nd November 2021

Ahead of FOMC on Wednesday Wall Street hovered around record highs yesterday as investors await potential changes in monetary regime by the Federal Reserve given months of above-target inflation. The Fed is expected to announce a reduction of its $120bn monthly bond purchases though the pace is uncertain. The S&P 500 index closed 0.18% higher at a fresh record high as the consumer stocks offset weakness in the tech sector, while Nasdaq rose 0.63%.

Carrying over momentum from October’s gains on the back of strong earnings and as expectations of interest rate hikes supported bank stocks, with the bank-heavy Italian and Spanish indexes rose 1.2% and 1.4% respectively, while German DAX added 0.75%.

Coming into Tuesday, Australian equities dipped, with banks and miners weighing the ASX 200 index down, as investors cautiously await clues on whether the Reserve Bank of Australia (RBA) will discard bond yield targeting as recent remarks suggest the measure has fallen out of favour. Meanwhile Hong Kong falls amid scrapping of quarantine exemptions for senior executives and Japan too retreats on fading euphoria of the newly elected government.

Brent crude settled slightly higher on Monday at the price of $85.18 per barrel. Bitcoin price sidelined at $60,718, while EUR/CHF hits fresh 18-month lows under 1.0550, as recent strength in the Swiss Franc has caught many traders off guard, given that it seems not to reflect recent fundamental developments.

image_2021_11_02T03_27_12_763Z

Figure 1 (Source: IS Prime) EURCHF Daily : EURCHF hits fresh lows, nearing pandemic levels at 1.05 as the euro accelerates it’s appreciation and the SNB posting a loss of 2.075 bn francs in the 3rd quarter.

Headliner to Review

  • The October US ISM manufacturing index dipped marginally from 61.1 to 60.8, but the outcome is still positive as it is well above the 50 break-even level and shows that the economy continues to perform well despite the widespread supply chain issues and labor market shortages that plague the economy.

Headliner to Watch

  • New Zealand will release its unemployment rate in tomorrow, expected to be 3.9% compared to 4% in the previous quarter.
  • US ISM Services PMI is due to release, forecasted to reach 61.9 which is in line with the figures from previous month.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Kerry Man