Market Commentary – November 23, 2021

Kevin Jock

23rd November 2021

Wall Street stocks dropped on Monday as traders interpreted Joe Biden’s renomination of Jay Powell as chair of the Fed as a sign that US president approves of a hawkish pivot by the central bank to deter soaring inflation. The S&P 500 index closed the day 0.32% lower, while Nasdaq tailed late in the trading day, closing 1.26% lower. However, banking stocks are up, rising along with bond yields as Powell is considered more hawkish than Governor Lael Brainard, who was seen as the other potential candidate for the job.

European equities ended flat on Monday as Germany’s warning of tighter lockdown restrictions overshadowed gains in Telecom Italia (TIM) following a $12bn proposal from US fund KKR to Italy’s largest phone group private. KKR set an indicative price of 50.5-euro cents for its buyout offer, a 45.7% premium to TIM’s closing price on Friday. Euro STOXX 50 slid 0.41%, FTSE 100 rose 0.44% and CAC 40 dropped marginally lower by 0.1%.

Asia stocks were mostly lower on Tuesday, tracking a retreat on Wall Street except Australia. Its ASX 200 index outperformed with a 0.55% gain, boosted by miners and energy stocks. Japanese markets were closed for a public holiday. Hong Kong shares dropped for a fifth straight session, weighed down by lingering worries over weak earnings from HK listed Chinese tech firms, with the Hang Seng Index down by 1% at the mid-day close.

Brent crude rose to a high of $80.15, settling 1% higher for the day at $79.57 a barrel. Gold price dropped significantly on Monday as the US dollar pushed to a new high for the year, closed the market at $1804 per ounce, down by nearly 2.5% for the day. GBPUSD is also trading close to its low for the year after the strengthening of the greenback, currently at $1.3388.

image_2021_11_23T06_59_13_572Z

Figure 1 (Source: IS Prime) IDX.HK.50 Daily : Hang Seng resumes downtrend, pinned down by weak corporate earnings and pessimistic outlook from Chinese tech giant.

Headliner to Review

  • In November 2021, the flash estimate of the consumer confidence indicator decreased markedly in both the EU (2.1 points down) and the euro area (2 points down) when compared to October 2021, at -8.2 points and -6.8 points respectively.

Headliner to Watch

  • Reserve Bank of New Zealand (RBNZ) will announce its official cash rate on Wednesday, expected to have a hike of 25 basis points to 0.75% as expected by the market.
  • US preliminary quarterly GDP is expected to have a modest upward revision to 2.2%, compared to 2% previously.

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Authors:
Antony Tan
Kerry Man