Closing Report 07.10.2021

Fumio Kishida, new japan’s prime minister

 

AMERICAN MARKETS MID DAY

United States major stock markets  opened with major gains on Thursday after the latest report revealed that the initial jobless claims dropped to 326,000 from 364,000. Stock markets in the US started the week with losses as Monday trading session was driven by the sell-off of technology shares, including FAANG stacks as the 10-year Treasury yield continued to rise. Also, tech giants paid the price of their malfunction with the cease of social networks. Meanwhile, Facebook lost nearly 5.6% at its lowest point after a former employee, whistleblower, accused the company of « betrayal of democracy » and revealed her identity, saying she will also testify before Congress. On Tuesday, US trading day closed with gains following the release of economic data where Services Purchasing Managers’ Index (PMI) beat analyst expectations rising to 61.9% and marking the 16th consecutive month of figure growth. Business Activity Index also went up by 2.2 percentage points, while Employment Index dropped by 0.7 percentage points. On Wednesday, US markets extended gains as the debate on the debt ceiling continued while the President Joe Biden met CEOs to discuss the matter while Secretary of the Treasury Janet Yellen said it could « cause a recession ».

EUROPEAN MARKETS CLOSING

Major stock markets on the Old Continent closed higher on Thursday after the European Central Bank (ECB) observed a « significant improvement » in its outlook for inflation. European markets started the week lower as Sentix data showed that Eurozone investor confidence has plummuted, meanwhile, British Chancellor of the Rishi Sunak admitted that the United Kingdom’s recovery from the pandemic « wcomes with cost » as the country’s debt has reached almost 100% of its gross domestic product (GDP) but stressed it was necessary to put public finances « back on a sustainable footing ». On Tuesday, European markets closed with gains as PMI data revealed that the UK service sector beat expectations to expand in September and European Central Bank Governing Council member Robert Holzmann expressed hope that the spike in inflation remains transitory. Major stock markets in Europe closed in the red on Wednesday despite a late recovery following Putin’s comments on stabilizing the energy market. Investors were discouraged by weak economic data and continuing inflation concerns. Retail sales in the euro area grew 0.3% in August according to Eurostat and construction PMI in the United Kingdom dropped to 52.6 in September per IHS Markit/CIPS.

ASIAN PACIFIC MARKETS CLOSING

Asian stock markets traded with strong gains on Thursday after it was reported that Chinese and United States Presidents plan to hold a virtual meeting before the end of 2021 while Chinese senior diplomat Yang Jiechi spoke about the negative consequences of any potential confrotation between his country and the US. Asia-Pacific region markets closed mixed on Monday, with trading in China and South Korea closed due to exchange holidays. The Nikkei 225 plunged by 1.07% or 307 points at 7:33 am CET following the news that Fumio Kishida has been officially elected as Japan’s new prime minister. That day, the Hang Seng plummetd 2.01% with the exchange halting trading of Evergrande’s assets likely due to worries of the estate giant’s potential collapse. On Tuesday, the markets in Asia recorded deep losses as IHS Markit reported another contraction in business activity and new orders last month in Japan, making the NIKKEI 225 plunged 2.57% that day. Meanwhile, China was still cosed due to the National Day holiday and will remain until Friday. On Wednesday, the Asia-Pacific region contiuned to trade lower with the NIKKEI 225 slipping by 0.98%, contuning it’s weekly fall. However, Bank of Japan Governor Haruhiko Kuroda recently insisted the economy has picked up recently due to an increase in manufacturing and exports.

COMMODITIES & FOREX MARKETS

• Crude oil futures prices rose over 3% for a brief period on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) decided to leave their agreement on monthlyoil production increases of 400,000 barrels per day (bpd) intact for the month of November.
• The United States Energy Department spokesperson stated on Thursday that currently the agency is not considering releasing crude oil supplies from the national strategic reserves, nor does it plan to pursue banning oil exports.
• Bitcoin has passed the major psychological and technical level of $50K and continues to grow. In the last 24 hours alone, BTC has shown a growth of 6% and is trading around $55K. Over the week, Bitcoin spiked by 26%. Another psychological milestone is that Bitcoin’s capitalisation has overcome $1 trillion.

Companies are hiring widely despite fears about Covid

Private jobs were up 568,000 for the month, better than the Dow Jones estimate of 425,000 and ahead of the revised downward reading of 340,000 in August. The initial August report showed growth of 374,000. The data comes amid concerns about the speed at which hires would increase given lingering fears about the delta gap and signs that the rapid economic growth of 2021 was beginning to slow down as autumn approaches, in particular due to supply chain bottlenecks which have pushed inflation up sharply. Although the industry, which includes bars, restaurants, hotels and more, employs around 800,000 more workers than a year ago, its unemployment rate remains at 9.1%, against 5.2% in the United States, according to data from the Ministry of Labor until August. .

A large portion of these hires appear to come from hotels and large chains, as companies with 500 or more employees have been at the forefront of job creation with 390,000. The faster pace of job creation comes with Covid cases on the wane nationally, despite some localized hot spots. Cases averaged 97,909 on a seven-day rolling basis through Monday, up from 160,284 a month ago, according to the CDC. As usual, services dominate with 466,000 new hires, helped by education and health services with 66,000, professional and commercial services with 61,000 and 54,000 in commerce, transport and public services.

The Dow Jones estimate of economists is 500,000 new jobs after falling just 235,000 in August. Until August, ADP’s private payroll count had exceeded the government’s count by an average of 37,000 per month.