Market Commentary – October 18, 2021

Kevin Jock

18th October 2021

Wall Street stocks had their best week in nearly three months as strong corporate earnings offset nerves about inflation. The S&P 500 rose 0.75% on Friday for a gain of 2% over the past five days, led by Industrial and financial groups. The Nasdaq ended the session 0.5% higher.

Likewise, European stocks marked their best weekly performance in seven months on Friday, with the STOXX 50 index rose 0.7% to close at a one-month high, while both CAC 40 and DAX ascended 0.63% and 0.81% respectively. Banks supported the index, up 1.8% after forecast-beating quarterly results from Wall Street’s biggest lenders benefiting from an economic rebound and deals frenzies.

In Asia, Japanese shares closed slightly lower on Monday, as investors booked profits following a recent rally, with the Nikkei 225 inched down 0.15% to close at 29,025.46. Meanwhile, the Chinese stocks closed lower as world’s second-largest economy only grew 4.9% in July-September from a year earlier, hurt by power shortages and sporadic COVID-19 outbreaks, with the Shanghai Composite Index lost 0.12%.

Bitcoin prices held above $60K for most of the weekend, by having its best weekly close in history. At current prices of around $62K with just 4% away from making a new record price high. Such positive momentum has been driven by the increase likelihood of a Bitcoin futures ETF finally being approved by the US SEC. On the currency front, the pound gained against yen, having reached to ¥157.4 on last Friday’s high, its highest level since early 2016. Monetary policy is to diverge among the two with the BOE Governor remarking the need to tighten monetary policy against persistent inflation whilst the Bank of Japan has not yet indicated its readiness to withdraw pandemic-era monetary stimulus.


Figure 1 (Source: IS Prime) CC.BTC.USD Daily : Prospect of first bitcoin ETF continues to fuel frenzy with the cryptocurrency approaching all-time highs.

Headliner to Review

  • The US Retail Sales for September increased by 0.7% vs. an expectation of -0.2%. It appears Americans haven’t been affected yet by any increasing costs due to supply chain issues.
  • The US University of Michigan sentiment index has unfortunately softened in early October despite Covid case numbers falling sharply and incomes and wealth rising. Nonetheless consumers are clearly out there spending. The actual figure came out to be 71.4 compared to the forecast figure of 73.5.

Headliner to Watch

  • US monthly Industrial Production statistics is due to release in this evening, forecast to increase by 0.3%.
  • The US Housing Starts data is expected to be 1.61M, compared with 1.62M from the previous month.

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Antony Tan
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