Market Commentary – November 5, 2021

Kevin Jock

5th November 2021

The record-setting pace for U.S. equity markets continues, with the S&P 500 and Nasdaq adding to their all-time highs set yesterday. The Dow though, marginally lower. Investors remain confident in economic growth after Fed policymakers said they were in no hurry to raise interest rates. The tech sector is getting a lift from shares of Amazon and Alphabet, which are both up more than 1%.

European equities rose for a fifth straight session on Thursday to hit record highs as well, as the Bank of England left its benchmark rate at an all-time low. The Euro STOXX 50 index closed 0.55% higher after spending most of the day in positive territory, while DAX gained 0.44%, hitting a record high, after strong earnings from Deutsche Post led to a 3% rise in its stock.

Australian shares advanced on Friday, as heavyweight miners benefited from higher commodity prices, while Link Administration topped the benchmark index on a A$2.81bn takeover bid from US private-equity firm Carlyle. The ASX 200 index was up 0.6%, set to notch its best week since late-May. Meanwhile, Japanese stocks fell due to uncertainties about domestic corporate outlook, with the Nikkei 225 dropped by 0.67% at the mid-day close.

Oil prices sank on Thursday, reversing earlier gains in a volatile session after a report that Saudi Arabia’s oil output will soon surpass 10 million barrels per day for the first time since the outset of the COVID-19 pandemic, with the price of Brent Crude closes at $81.57. On the other hand, GBP/USD plummet nearly 200 pips on Thursday, triggered by the BoE’s decision and more recently reinforced by a rally of the US dollar across the board. Cable broke under 1.3500, reaching at 1.3471, the lowest level in a month.

image_2021_11_05T03_19_38_566Z

Figure 1 (Source: IS Prime) IDX.DE.30 Daily : Lagging U.S counterparts, the German DAX finally hit new all time highs on Thursday close with the energy behind it.

Headliner to Review

  • Bank of England (BoE)’s Monetary Policy Committee votes 7-2 to leave borrowing costs at current record low of 0.1%, which surprised investors who had spent the past few weeks positioning for a shift towards tighter monetary policy from major central banks.
  • The US advance figure for seasonally adjusted initial claims was 269K, a decrease of 14K from the previous week’s revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256K.

Headliner to Watch

  • The US NFP data is due to release in today, as analysts anticipate the October figures to come in at 450K compared to 194K in the last reading.

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Authors:
Antony Tan
Kerry Man