Market Commentary – September 10, 2021

Kevin Jock

10th September 2021

US equity markets remain on struggle street with the S&P 500 recording its fourth consecutive day of decline, down 0.46%, the Nasdaq closed -0.25% and the Dow was -0.43%. Investors are seemingly conflicted by mixed data signals while uncertainties over the economic impact from the delta variant outbreak are restraining investors appetite for risk.

The Euro zone stocks bounced off sessions lows to end little changed on Thursday after ECB’s conference, with the pan-European STOXX 600 index ended largely unchanged, as it had dropped 1.5% over the past two days on fears of a more hawkish than expected ECB. UK’s FTSE 100 led losses among regional indexes with 1% drop.

In Asia, Shanghai stocks witnessed their biggest weekly gain in seven months and closed in today, after US president and the Chinese counterpart’s candid conversation, with the Shanghai Composite Index gained 0.3% to 3,703 points. HK shares closed high on Friday as well, the Hang Seng index rose 1.9%.

Bitcoin continues to fluctuate around $46,000 as investors digest implications of El Salvador’s adoptions, whilst gold inches higher to $1,794. The US dollar index slid as Russia’s rubble and China’s renminbi take headlines. USDRUB heads towards an intermediate support line at 72.60 as the Bank of Russia is expected to raise rates on Friday for its fifth consecutive time. Hawkish endeavours are in response to annual inflation reaching 6.7% last month, beyond the central banks 6.5% target. USDCNH is set to settle at it’s highest in 3 months amid improving relations between US – China as President Biden reported reached out to President Xi, vowing to hold regular communication channels and get relations back on the right track.

Crude oil fell below $68 following an opaque announcement from Beijing’s National Food and Strategic Reserves Administration alluding to the release of millions of barrels of oil into the domestic refinery market. The move was predicated on the basis that it would “ease the pressure of rising raw material prices”.


Figure 1 (Source: IS Prime) USDRUB Daily : Russian rubble set to test support line following expected rate hike.

Headliner to Review

  • As expected, the ECB will moderate its Pandemic Emergency Purchase Program (PEPP) bond buying pace in Q4 with its December meeting now a key event. The ECB president also stressed that the decision was not tapering, but rather a recalibration consistent with the PEPP’s envelop. The exact figure of the new monthly bond buying pace is yet unconfirmed, but it was reported to be still near €60b-€70b per month.
  • The US Crude Oil Inventories is also announced, decreased by 1.5 million barrels from the previous week as production tumbled the most on record last week due to disruptions by Hurricane Ida.

Headliner to Watch

  • Both the Japanese BSI Manufacturing Index figure and the monthly PPI will be released in next Monday, with the previous figures of -1.4 and 5.6% respectively.

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Antony Tan
Kerry Man