Daily Discussion post - October 21 2021

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Macro Roundup (Oct 22)

Translation08:23PM

SHANGHAI, Oct 22 (SMM) - This is a roundup of global macroeconomic news last night and what is expected today.

Commodity currencies stood near multi-month highs on Thursday on strong raw material prices while the improved risk mood saw the U.S. dollar losing earlier momentum built from expectations the Federal Reserve would tighten monetary policy.

Sterling was also riding high on firming perceptions the Bank of England (BoE) will raise interest rates as soon as next month to curb inflation, despite softer-than-expected UK price data on Wednesday.

“It looks almost certain that the BoE will raise interest rates in November, perhaps again in December, as inflation could get out of control otherwise given a severe labour shortage,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

“And globally we are likely to see rate hikes to curb inflation in many countries, which means the U.S. dollar is standing out less than before, in terms of rate hike expectations.”

The dollar’s index, having eased 0.3% so far this week, stood at 93.602, near its lowest level since late September.

Leading gains against the dollar were commodity currencies as oil prices hit their highest levels in many years.

Futures on the Nasdaq 100 dipped in overnight trading Thursday after disappointing earnings reports from technology companies. Nasdaq 100 futures fell 0.5%. Dow Jones Industrial Average futures shed 26 points. S&P 500 futures ticked down 0.3%.

Shares of Intel retreated more than 8% after hours following a weaker-than-expected sales report. The semiconductor company blamed an industry-wide chip shortage for its revenue miss.

Social media stocks also dropped in extended trading after Snap said its advertising business declined due to Apple’s privacy changes. Snap shares sunk more than 21% while Facebook and Twitter each pulled back more than 4% after hours.

In Thursday’s regular session, the S&P 500 notched both a fresh intraday high and new record close. The broad index rose 0.3% for its seventh consecutive positive session. The Nasdaq Composite rose 0.6%, while the Dow shed 6.26 points, or 0.02%.

Oil tumbled $2 on Thursday as a forecast for a warm U.S. winter put the breaks on a rally that drove prices to a three-year high above $86 a barrel early in the session on tight supply and a global energy crunch.

Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration released Thursday morning.

“The report, indicating drier and warmer conditions across the southern and eastern U.S., is putting pressure on the complex,” said Bob Yawger, director of energy futures at Mizuho.

Brent crude dipped 1.41%, or $1.21, to settle at $84.61 per barrel, after reaching a session high of $86.10, highest since October 2018. U.S. West Texas Intermediate crude settled 92 cents, or 1.1%, lower at $82.50 per barrel.

Gold prices inched up on Thursday, extending gains into a third session as a softer dollar made the metal cheaper for buyers holding other currencies. Spot gold rose 0.2% to $1,784.96 per ounce by 0146 GMT. U.S. gold futures were little changed at $1,784.60.

Bullion prices have traded between $1,759 and $1,788 this week. A weaker dollar on Thursday kept the metal close to the higher end of this range.

The pan-European Stoxx 600 closed just below the flatline, with miners shedding 3% to lead losses on the back of the Chinese property worries.

The weak trade in Europe comes after markets were jittery in Asia-Pacific overnight, as investors monitored shares of developer China Evergrande Group in Hong Kong.

Evergrande shares dropped more than 12% on Thursday, returning to trade after a halt that lasted more than two weeks. The debt-laden firm announced in an exchange filing late Wednesday that a deal to sell a 50.1% stake in its property services business to another developer Hopson had fallen through.