Market Commentary – September 8, 2021

Kevin Jock

8th September 2021

US shares were mixed and global equities retreated from record highs on Tuesday as investors worried about the slowing pace of economic recovery and hopes the Fed will delay tapering its bond purchases. The Dow Jones fell 0.76% to end at 35,100 points, while the S&P 500 lost 0.34% and Nasdaq climbed 0.07%.

European stocks ended lower on Tuesday as caution kicked in ahead of the ECB meeting later this week. The STOXX 600 benchmark fell 0.5% but was not far from last month’s lifetime peak. The FTSE 100 fell by 0.53%, while both CAC 40 and DAX retreated by 0.26% and 0.56% respectively.

Asian stock markets are mostly lower on today, as a more risk-averse mood spread into the market from Wall Street overnight due to worries about slowing growth that hurt equities while helping the dollar firm. Both the Australian and the HK stock indices are modestly lower, while Nikkei 225 closed higher.

As El Salvador formally adopts bitcoin as legal tender, ill-prepared server capacity saw the government temporarily disable Chivo, their bitcoin wallet to resolve technical issues. As users were hindered from installing the application, news spread throughout headlines and in turn saw the cryptocurrency crash from $52,000 to just above $42,000 in a matter of hours. Bitcoin has since recovered back to 45,000.

Meanwhile, gold too fell sharply from $1,823 to 1,794 whilst the US dollar gained across the board after St. Louis Fed President James Bullard remarked in the Financial Times that despite slowing labour market improvements, the central bank should push ahead with tapering.


Figure 1 (Source: Thompson Reuters Eikon) Bitcoin 1-minute : Rough start to El Salvador’s outlook after bitcoin crashes following the nations formal adoption of the cryptocurrency as legal tender.

Headliner to Review

  • The Reserve Bank of Australia (RBA) has announced to maintain both the cash rate target and the interest rate on hold, as well as to continue to purchase government securities at the rate of $4 billion a week until at least February 2022, due to increased uncertainty associated with the Delta outbreak which delayed economic recovery.
  • The German ZEW Economic Sentiment index decreased in the Sep 2021 survey, falling 13.9 points to a new reading of 26.5 points. Such decrease is due to the global chip shortage which negatively affected the automobile sector as well as shortage of building material in the construction sector, which in turn reduced profit expectations for these sectors.

Headliner to Watch

  • The ECB is due to make its monetary policy announcement on Thursday. Surging inflation across the Eurozone as the economy reopens from lockdown has raised the possibility of the ECB to rein in its accommodative policy.
  • We will also see the release of the US crude oil inventories figure, with the previous week’s figure of a reduction of 7.2M barrels of oil.

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Antony Tan
Kerry Man