Market Commentary – October 29, 2021

Kevin Jock

1st November 2021

Wall Street stocks rose on Thursday as traders shrugged off disappointing US economic growth data to focus on a flurry of strong earnings reports, with the Nasdaq Composite index climbed to a record high, ahead of quarterly numbers from Apple and Amazon due after the closing bell, up by 1.39%. While the S&P 500 share index gained 0.98%. Facebook Inc is now called Meta, in a rebrand that focuses on building the “metaverse”, which is a shared virtual environment that it bets will be the successor to the Mobile Internet.

European equities closed slightly higher on Thursday, buoyed by robust earnings from food and technology stocks, as the ECB kept its massive stimulus program open and maintained its view that a recent spike in inflation would be temporary. The Euro STOXX 50 index closed 0.31% higher, while London’s FTSE 100 ended the day flat to where it opened.

In Asia, Australian shares edged lower in early trade on Friday, with broad weakness among the big banks offsetting gains by the country’s export focused healthcare stocks, including biotech major CSL Ltd. The benchmark eventually closed at 7,323.7 points, dropped 1.44%. Meanwhile, China stocks ascended on Friday as consumer staples and IT firms gained, while the real estate sector witnessed its worst week since Feb 2018 on a planned tax scheme.

WTI crude closed at $83.389 a barrel, rose marginally by 1.18% from the previous day. Bitcoin dropped sharply to $59K during the US hours yesterday, then recovering to around $61000 in Asian hours. EURUSD consolidates the biggest daily jump since May, reaching near 1.17 before it sidelined later. Having witnessed both the US Q3 GDP and the ECB monetary policy, markets reconfirm the previous day’s risk-on mood.

image_2021_10_29T07_36_47_389Z

Figure 1 (Source: IS Prime) USDCNH Daily : Despite attempts by the PBOC in stifling the Renminbi’s depreciation, America’s bettering economic prospects has ensured continuing inflows for the greenback.

Headliner to Review

  • The ECB said it will keep its vast bond-buying program running at a high pace despite rapidly rising inflation, during the press conference in yesterday. Its €1.85tn pandemic emergency purchase program (PEPP) would continue at a moderately lower pace, as well as keeping its deposit rate unchanged at -0.5%.
  • The Advanced look at Q3 GDP for the US was only 2% vs 6.7% in Q2. Although economists expected the economy to slow to 2.7% due to supply chain and the Delta variant of the COVID, the headline print was even worse than forecast.

Headliner to Watch

  • The G20 Summit 2021 convenes in this weekend at Rome, which will focus on three broad, interconnected pillars of action: People, Plant, Prosperity.
  • US ISM Manufacturing PMI is due to release in next Monday, with the figures from the previous month reaching 81.2. 

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Authors:
Antony Tan
Kerry Man