Closing Report 15.10.2021

inflation fears continue to rise

 

AMERICAN MARKETS MID DAY

United States major stock markets  started the week lower as inflation was still seen as a big concerns to the economy with particular focus on surging fuel prices. On the business front, Southwest Airlines dropped nearly 4% as the company canceled over 2,000 flights since the weekend. On Tuesday, stocks extended their losses as the number of job openings in the United States stood at 10.4 million in August, down 659,000 from the figure documented in July. Meanwhile, the President of the Federal Reserve of Atlanta, Raphael Bostic, stressed stated that the riing inflation is episodic, meaning it will have a prolonged effect on the American economy. Wednesday session closed green with Nasdaq soaring more than 100 points following the report by the Federal Reserve which stated that the central bank will start tapering asset purchases before the end of 2021. On the data front, the Consumer Price Index (CPI) for all items in the United States saw an annual gain of 5.4% in September, surpassing expectations and making fears on inflation rise. On Thursday, Wall Street ended up the session higher as earnings season started in full swing. The S&P 500 made its biggest jump since early March, as companies including Morgan Stanley and UnitedHealth climbed following strong results, while data on the labor market and inflation soothed fears over the outlook for higher rates. For the last day of the week, major US stocks opened higher after retail and food services sales increased 0.7% in September. Also, President Joe Biden signed into law a bill aimed at raising the federal debt ceilling, as the White House expressed optimism that the reconciliation bill will « soon » be reality.

EUROPEAN MARKETS CLOSING

Major European markets closed slightly higher on Monday as governments across the continent continued battling the energy crisis, which pushed oil prices upward. Meanwhile, European Central Bank Executive Board Member Philip Lane explained that an energy price shock could further destabilize the inflation rate. On Tuesday, stocks went downard amid investor concerns for surging inflation, continuig supply shortages and monetary policy changes from the central banks. On the data front, reports revealed that euro-area economic sentiment declined further in October, while Germany saw a fifth consecutive month of dropping sentiments and expectations. Additionally, The International Monetary Fund (IMF) lowered on Tuesday its global growth projection for 2021 slightly to 5.9% from 6%, leaving the 2022 growth expectations unchanged at 4.9%. Wednesday trading session closed higher after Russia annouced readiness to increase its gas supply to the European Union. Also, the German Federal Ministry for Economic Affairs and Energy reassured that it wasn’t experiencing any shortages. Thursday session closed higher driven by corporate eanrings release while ECB President Christine Lagarde warned that elevated inflation could last longer. Today, major European markets closed higher as the Euro area trade surplus amounted to €4.8 billion in August, according to the first estimate by Eurostat released on Friday.

ASIAN PACIFIC MARKETS CLOSING

Asia-Pacific region started the week mostly higher as investors still analyzed the effects that China’s energy crunch will have on markets. Meanwhile, Auckland is set to remain under lockdown and markets in South Korea are closed today due to a market holiday. On Tuesday, the markets of the region recorded a slow down mainly driven by the rising inflation while South Korean President Moon Jae-in urged the country’s central bank to stabilize consumer prices. Trading session of Wednesday closed mix as investors analyzed the latest data coming out of China, it’s trade surplus surprised investors’ expectations in September, expanding to $66.76 billion and rising when compared to last month’s $58.34 billion. Meanwhile, tensions between China and Taiwan continue to increase. On Thursday, Asian markets jumped after the US Federal Reserve’s minutes showed the central bank is likely to start tapering asset purchases in November. On the data front, China’s consumer price index (CPI) missed the estimates and increased by 0.7% on an annual basis in September while the country’s producer price index (PPI) surpassed expectations, jumping 10.7% compared to the last year’s figure and Japan’s August industrial production index came in at 94.6 points, 3.6% lower than the previous month. On Friday, the rally continued after positive investor sentiment seemingly spilled over from the United States. Meanwhile, the chip company TSMC said on Thursday it plans to start building a new plant in Japan to meet market demand, with production expected to begin from late 2024. Finally, Washington reiterated that « US commitment to Taiwan is rock solid. »

COMMODITIES & FOREX MARKETS

• Commercial crude oil stockpiles in the United States increased by 6.1 million barrels in the week ending October 8, the US Energy Information Administration reported on Thursday.
• The Organization of the Petroleum Exporting Countries (OPEC) said in its Monthly Oil Market Report released on Wednesday that the estimated increase in global oil demand for 2021 has been revised down from 5.96 million barrels per day to 5.8 million bpd. The average oil demand for the entire year is now seen as standing at 96.6 million bpd, according to the cartel.
• Bitcoin is back above the 60 000$ and very close to its all-time high, standing at 64 918.95$

China’s central bank appeases on the Evergrande case

The People’s Bank of China said on Friday that indebted developer China Evergrande is her own case and that most real estate companies in the country are stable. Property giant Evergrande has $ 300 billion in liabilities and missed another payment to investors in the United States. Economists have noted that Evergrande’s large holdings of land and physical characteristics set it apart from US. The risks posed by Evergrande are « controllable », Mandarin told a news conference at Zou Lan, director of financial markets at the People’s Bank of China.« China Evergrande’s problems in the real estate industry are an individual phenomenon, » he said, noting that real estate prices remained stable.

Many new apartments in China are sold to consumers before completion.