The Market Week – September – Week 2
Equities took centre stage this week as Central Banks maintained their Dovish outlook and there were signs of a possible plateau in US inflation. The USD gyrated, Oil rallied and yields, and stock markets cooled. Still to come this week; Kiwi GDP, Aussie Jobs, EZ Inflation and from the US: Retail Sales, the Philly Fed manufacturing Index and UoM Consumer Sentiment.
The number and quality of the US jobs recovery grinds on. Amazon announced they plan to hire 125,000 people and pay them an average of $18 per hour. The weekly US unemployment claims posted a new pandemic low at 310,000 last week and are expected to rise this week to 325,000. However, the long term unemployed remains persistently high and rose again this week.
The vaccine rollouts continue to drive sentiment, but the Delta variant remains a significant concern as plans for the winter season in the northern hemisphere start to emerge. In Asia lockdowns remain in place although there has been a significant increase in vaccination rates, particularly in Australia and Japan.
This week FX volatility cooled as the USDIndex oscillated around 92.50 between 92.85 and 92.25. EURUSD dipped to 1.1770 before recovering to 1.1825, while USDJPY sank under 109.40, to print lows not seen since August 16. Cable, on the other hand, rallied from lows at 1.3750 to over 1.3900, before once again testing 1.3800.
The US stock markets “consolidation at highs” we had seen last week broke down as the September effect raised its head. All three indices broke and breached their 21-day EMA. This week the USA500 has posted 3 days under the 21 EMA and a new 15 day low, the USA100 a new 11 day low and the USA30 a new 39 day low.
Volatility in the Gold market cooled this week and the price found support at $1780 before recovering the 21-day moving average at $1800, and printed a high at $1808.
USOil prices continued to rally this week as another hurricane hit the southern USA and the draw down in inventories missed expectations. From lows last week at $67.25 the price rallied over 5%, moving above $70.00 to peak over $71.00, ahead of this week’s inventories.
The yield on the US 10-Year Treasury Note remains very much in focus and a key market mover. From last week’s 4-week high of 1.382% it cooled significantly to 1.267% and a 2-week low, before recovering to 1.27%.
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Stuart Cowell
Head Market Analyst
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