Market Commentary – November 22, 2021

Kevin Jock

23rd November 2021

In Wall Street, the Nasdaq Index closed above 16,000 points for the first time on Friday, in its second-straight record finish powered by technology stocks, while pandemic jitters sent the Dow to its fourth losing session in the last five days, such decline was caused by banking, energy and airline stocks slumping on fears that European countries, battling a resurgence of COVID-19 cases, could follow Austria in moving towards a full lockdown.

In Europe, COVID-19 lockdowns have returned to haunt Europe’s economic prospects, forcing investors on Friday to reassess portfolios and sell vulnerable assets such as the euro and bank stocks. All major European indices were down marginally on Friday as Austria put itself back under lockdown, while Germany’s health minister refused to rule out one.

Elsewhere in Asia, Japan’s Nikkei share average gave up losses to close higher on Monday as investors bought cheaper stocks, while concerns on return of the pandemic restrictions in Europe capped gains, with Nikkei 225 ended up 0.09% at the market close. Meanwhile, China stocks closed higher on Monday as investors cheered the central bank’s attempt to strike a balance between economic growth and risk controls, with the third-quarter monetary policy implementation report represented an official change to its policy stance and set the stage for more decisive monetary and credit easing.

Oil prices came off seven-week lows on Monday but remained under pressure after Japan said it was weighing releasing oil reserves and as the pandemic in Europe worsened, raising concerns about both oversupply and weak demand. Brent crude now trading below $80 a barrel. On the other hand, US dollar traded close to a 16-month high to the euro on growing anxiety over the impact of the pandemic infections in Europe, with the EURUSD currently trading at $1.1270.

image_2021_11_22T08_49_16_908Z

Figure 1 (Source: IS Prime) IDX.US.100 Daily : Tech continues to surge to all-time highs breaking ahead against cyclicals.

Headliner to Review

  • UK retail sales volumes rose by 0.8% in October 2021, from a revised unchanged position of 0% between August and September. Non-food stores was the only main retail sector that saw a rise in sales volumes, increasing by 4.2% in October.

Headliner to Watch

  • German Flash Manufacturing PMI is expected to be 56.6, down from 57.8 from last month.
  • UK Flash Manufacturing and Services PMI are due to release on Tuesday as well, forecasted to be 57.2 and 58.2 respectively.

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Authors:
Antony Tan
Kerry Man