Closing Report 19.11.2021

austrian lockdown to start on monday 

AMERICAN MARKETS MID DAY

Indexes in the US started the week mostly flat as rising Treasury yields dented the appetite for technology stocks while US President Joe Biden was getting ready to sign the infrastrucre bill into law. On the business front, Ohio Attorney General launched a lawsuit against Facebook, claiming that the social media giant misled investors while Boeing shares advanced on signs of demand for its freighter aircraft.On Tuesday, major American stocks closed in the green zone after the retail and food services sales in the United States saw a monthly rise of 1.7% in October to come in at $638.2 billion, exceeding expectations. Meanwhile, Home Depot surged 5.73% after posting a sales annual rise of 9.8% to reach $36.8 billion, surpassing expectations. Wednesday trading session in the US closed mostly lower as the energy sector continued its sluggish start to the week with the International Energy Agency warning of a “reprieve from the price rally […] due to rising oil supplies. » On company news, Pfizer completed its $2.2 billion acquisition of Trillium Therapeutics while Braze.Inc’s stocks soared by more than 35% on Wednesday, valuing the software company at nearly $8 billion at its debut on Nasdaq. On Thursday, US markets went mostly higher with both S&P 500 and Nasdaq reaching new record highs  as investors focused on upbeat retail and technology earnings which outshone hawkish inflation comments from a Federal Reserve policymaker. Meanwhile, the chipmaker, Nvidia, surged 8.2% after beating quarterly estimates and forecasting strong fourth-quarter revenue. At European closing time, US markets are mainly mainly mixed with the economically-stable tech sector outperforming after news of another Covid-driven lockdown in Europe weighed on sentiment. On the flip side, stocks linked to the travel industry, like the airlines Delta United and American Airlines and the cruise operators were hit hard by the lockdown news.

EUROPEAN MARKETS CLOSING

Major European markets started the week mostly higher with he CAC 40 and the DAX reaching new record highs after comments  from European Central Bank Chief Christine Lagarde helped beat back bets of tighter monetary policy, while a fall in miners kept gains at bay. Meanwhile, the European basic resources index slipped 1.1% as metal prices tumbled on China’s pledge to « phase down » coal at the COP26 summit. On Tuesday, both German and French indexes closed at all-time highs after data showed euro zone gross domestic product (GDP) rose 2.2% quarter-on-quarter in the July-September period, as expected while the unemployment rate in the United Kingdom for the three months to September period stood at 4.3%, delivering a better than expected result. On Wenesday, shares in Europe closed mixed on inflation news with an annual inflation rate in the Eurozone at 4.1% in October, rising from 3.4% observed in September. Meanwhile, the Bank of England is expected to become the first of the world’s major central banks to raise rates since the coronavirus pandemic, with this release cementing expectations for the December meeting. Thursday trading session ended up with losses despite reassuring statements by European Central Bank (ECB) Executive Board members while Germany faced the ossibility of introducing stricter coronavirus-related restrictions. On business news, ThyssenKrupp AG said that its net sales in fiscal 2020/2021 climbed 18% compared to the previous year to land at €34 billion while Continental fell 3.1% after it announced the departure of its chief financial officer following a probe into the illegal use of defeat devices in diesel engines. European stock markets finished the week lower after Austrian authorities are reportedly planning to introduce coronavirus-related lockdown measures in all regions of the country starting from November 22. Meanwhile, European Central Bank’s Christine Lagarde stated that the inflation rates will further rise through the remainder of 2021.

ASIAN PACIFIC MARKETS CLOSING

Shares in Asia-Pacific region started the week mixed after China reported an increase in its industrial production (+3.5%) and its retail sales (+4.9%) exceeding expectations by 3.7% meanwhile Japan’s gross domestic product (GDP) contracted by an annualized rate of 3% in the third quarter and industrial production in the country dropped by 2.3% in September. On Tuesday, stocks in the region were mostly up as United States President Joe Biden and Chinese President Xi Jinping expressed at the start of their virtual meeting the need to improve bilateral relations. Biden stated the two countries should make sure their competition « does not veer into conflict, » adding that « all countries have to play by the same rules of the road. » Wednesday trading day closed mixed as South Korea reported its  second-highest figure COVID cases since the beginning of the pandemic meanwhile Japanese car manufacturers recorded losses. On Thursday, Asian markets recorded losses despite Japan’s new stimulus package which will include record spending of about $488 billion due to huge payouts to cushion the economic blow from the COVID-19 pandemic. Also that day, the Hang Seng dropped by 1.37% led by Alibaba which fell by 4.92%. The Asia-Pacific region finished the week higher as the consumer prices in Japan went under the estimates in October and went down by 0.1 percentage points compared to last month’s data. In addition, Hang Seng Indexes Company Limited announced that four new companies will be added to the index pushing the number of constituents to 64.

COMMODITIES & FOREX MARKETS

• Organization of the Petroleum Exporting Countries (OPEC) Secretary General Mohammed Barkindo stated on Tuesday that the group is expecting the supply of oil to see a surplus « already at the beginning of December. »
• Commercial crude oil inventories in the United States, excluding those in the Strategic Petroleum Reserve, slid by 2.1 million barrels to 433 million barrels in the week ending November 12, the US Energy Information Administration (EIA) reported on Wednesday.
• The EUR/USD pair started the week under strong bearish pressure and slumped to its weakest level since July 2020 at 1.1263, then managed to stage a rebound and climbed toward 1.1400 on Thursday as the 10-year US Treasury bond yield began turning south in the second half of the week. Nevertheless, European Central Bank (ECB) President Christine Lagarde’s remarks on the policy outlook ahead of the weekend forced the pair to lose its traction.
• Bitcoin is down over 10% in the past seven days. The cryptocurrency tumbled below $56K for the first time since late October and liquidated millions worth of both long and short positions because of the volatility.

Gold about to get stronger ? 

Gold could finally be on the precipice of breaking out of its sideways trend as inflationary pressures are pushing prices close to a five-month high. Exchange-traded fund (ETF) investors have been rejoicing the past month as prices start to tick higher amid rising consumer prices, as reflected in a decade-high consumer price index (CPI) during the month of October. Gold-based ETFs below have been rising close to 6% the last four weeks.

Gold was caught in a seemingly perpetual holding pattern that saw prices yo-yo up and down the $1,800 level. The recent rally could continue to fuel gold prices towards their previous year-high of over $1,900 as inflation fears persist in the capital markets. Additionally, the U.S. Federal Reserve will be tapering its stimulus measures to shore up the economy amid the pandemic. This leads investors to believe that rates will also rise at some point, which should benefit the U.S. dollar. “Rate hikes remain a potential risk for gold, and only a clear break above $1,875 may drive further gains,” Carlo Alberto De Casa, external analyst at Kinesis Money said.However, a recent uptick in Covid-19 cases could tamp down the economic recovery in addition to inflation. Speaking about inflation, stagflation (an economic condition marked by slow growth and rising rates) could also provide more headwinds for investors. “The underlying support for gold and silver remains the inflationary pressures we continue to see in the market,” said David Meger, director of metals trading at High Ridge Futures, in a Reuters report.