• GLOBAL CAPITAL MARKETS OVERVIEW:
US stocks closed down on Tuesday, the Dow fell 290 points, and the Nasdaq recorded a decline for the fifth consecutive trading day. The core CPI of the United States rose 4% year-on-year in August, which was in line with market expectations, and was slightly lower than the July data. The market is also paying attention to the tax increase plan proposed by the US Democratic Party. The Dow fell 292.06 points, or 0.84%, to 34577.57 points; the Nasdaq fell 67.82 points, or 0.45%, to 15037.76 points; the S&P 500 index fell 25.68 points, or 0.57%, to 4,443.05 points. Although the US August CPI data released on Tuesday was better than expected, US stocks still closed down. Economic recovery concept stocks generally fell, and Bank of America became the leading decliner in the financial sector. General Electric led the industrial sector down. Liz Ann Sonders, the chief investment strategist at Charles Schwab, said: "What we need to see is that inflation continues to decline while the prospects for economic recovery will not weaken." Apple closed down 1%. On Tuesday, the company held an autumn new product launch conference to release new products such as the new iPhone, Apple Watch, and AirPods. Since the U.S. Department of Labor announced the abysmal August non-agricultural employment report on September 3, the U.S. stock market has continued under pressure. As of Tuesday’s close, the Dow and the S&P 500 have recorded a 6-day decline in the past seven trading days, and the Nasdaq has closed down for five consecutive trading days. The US stock market leader Apple closed down 1% on Tuesday, with a 16.1 billion U.S. dollars turnover. On Tuesday, Apple launched the new iPhone, the 9th generation iPad, iPad mini six and Apple Watch Series 7, and other new products. In addition, the company issued major updates on security vulnerabilities. According to media reports, an Israeli security company has been using a major security breach to sneak into the iPhone through iMessage since February. Apple released an important security update to fix this issue on Monday. Still, it is reported that this vulnerability has been used by the Israeli network security monitoring company NSO Group to carry out attacks. The fourth place in turnover, Microsoft closed up 0.9%, with a 6.4 billion US dollars turnover. Morgan Stanley analyst Weiss raised Microsoft's target price from US$305 to US$331, maintaining an overweight rating. He predicts that Microsoft's dividend may increase by more than 10%. The pan-European STOXX 600 index fell slightly by 0.01%, basic resources stocks fell 1.9%, and banking stocks fell 1.1%. Luxury stocks, including LVMH, Kering, Richemont, and Burberry, fell 1.9-3%, following the trend of Asian stock markets due to concerns about the increase in the number of new cases in China. Mark Taylor, a sales trader at Mirabaud Securities, said, "Continuing concerns about the epidemic in China and the lockdown of multiple cities in Fujian will not help market sentiment." The French CAC 40 index, which includes several luxury goods companies, fell 0.4%, and the British FTSE 100 index, which miners dominate, fell 0.5%. The German DAX index rose 0.14%. Despite this, many strategists still expect that European stock markets will outperform this year, helped by relatively high vaccination rates and catch-up trading in low-priced sectors such as banks and energy. The Shanghai Composite Index fell 1.42%, the Shenzhen Component Index fell 0.54%, and the ChiNext Index rose 1.32%. Northbound funds sold a net 4.128 billion yuan throughout the day, of which 3.784 billion yuan was sold through Shanghai Stock Connect. As a result, the Shanghai Index fell below 3700 points. According to the qualitative principle on the 3rd, it can be concluded that the Shanghai Index failed to effectively breakthrough 3700 points. This high probability indicates that the Shanghai Index has entered a high consolidation phase. Founder Securities Research believes that due to technical overbought and pressure near the high point of the year if the volume can not be effectively released, it will be difficult to effectively break through the year's high point. Technically, it is necessary to accumulate momentum below the year's high point and only fully accumulate momentum. The market can break through the high point of the year and form a continuing upward trend. In addition, the ChiNext index is stronger than the Shanghai Stock Exchange Index for the first time. We will observe whether the ChiNext Index can maintain its strength. In terms of sentiment, 1,154 companies rose, 1123 companies less than the previous trading day; 63 companies had a daily limit, 23 companies less than the last day; 31 companies had exploded, an increase of 12 companies from the last day trading; the ChiNext/Science and Technology Innovation Board daily limit eight companies, a rise of 2 companies from the last day trading; a limit of 6 companies, a decrease of 2 companies of the last trading day.
• REVIEWING ECONOMIC DATA:
Looking at the last economic data:
- US: According to a report from the US Federal Bureau of Labor Statistics released on Tuesday, September 14: consumer inflation in August increased by 0.3% versus July (forecast + 0.4% m / m, in July it was + 0.5% m / m) and by 5.3% versus August 2020 (forecast +5, 3% y / y, in July it was + 5.4% y / y);core consumer inflation (excluding food and energy prices) in August increased by 0.1% versus July (forecast + 0.3% m / m, in July it was + 0.3% m / m) and by 4% by August 2020 (forecast + 4.2% y / y, in July it was + 4.3% y / y).The growth rates of consumer inflation have been slowing down for the second month in a row, both on a monthly and year-on-year basis. In PCE, the Fed's preferred inflation tracking indicator, consumer inflation is around 4% y / y. Overall, consumer inflation was below the economists' consensus forecast even as Hurricane Ida halted oil and gas production in the Gulf of Mexico and spiked gasoline prices.
- US: Core consumer inflation posted the smallest gain since February, reflecting declines in prices for used cars (-1.5%), airline tickets (-9.1%), and auto insurance (-2.8%). The cost of hotel accommodation and car rentals has also dropped. This indicates an adverse effect of the delta strain, as the components have shown a rise in prices: household items, auto parts, clothing.
- US: The spread of the delta strain should stabilize in the coming weeks amid efforts to increase the national vaccination rate following the full approval of the Pfizer / BioNTech vaccine. This will be reflected in increased price pressure. The rise in office rents signals that economic activity is gaining momentum. Supply chain bottlenecks will persist longer than previously thought. As a result, enterprises will shift their costs to consumers, contributing to the growth of consumer inflation.
- US: US President Biden announced the nomination of Rita Joe Lewis as President of the Export-Import Bank of the United States. Lewis served in the US State Department during the Obama administration and has 25 years of work experience in international affairs and public policy. During Hillary Clinton's tenure as US Secretary of State, Lewis served as a special representative for global intergovernmental affairs under his command. After Clinton left, Lewis served as the vice-chairman of the U.S. Department of Commerce and at the same time served as an advisor to the chairman, becoming the first African-American woman to hold this position.
- US: Congressional Democrats have published their plan to raise taxes. It provides for an increase in corporate tax to 26.5% and a maximum rate for individuals at 39.6%. However, commentators on Washington's politics still point out that the final tax figures may be lower. The Joe Biden administration's proposal was more aggressive, as it involved raising the corporate tax to 28%.
- CN: September 14th, after a short period of low, the price of silicon materials has bottomed out since mid-August and has been rising for several consecutive weeks. According to data from the Silicon Industry Branch of the China Nonferrous Metals Industry Association, the price of polysilicon continued to grow slightly last week. Among them, the average transaction price of single crystal double feed, single-crystal dense material, and single-crystal cauliflower material rose by 1%. First-tier manufacturers are the mainstream of refill materials. The transaction price of long-term orders is around 211,000-213,000 yuan/ton, and the transaction range of bulk orders is 214,000-217,000 yuan/ton. Once again, the cost of silicon material stood at this year's high, increasing about 140% from the beginning of the year.
- CN: domestic commodity futures closed, black series led the decline, coking coal and coke fell by more than 5%, glass, Shanghai aluminum, etc. fell by more than 4%, soda ash, thread, etc. fell by more than 3%, PVC, SS, etc. fell by more than 2 %, Shanghai Aluminum, Shanghai Zinc, etc. fell more than 1%, Shanghai Yin, Zheng Mian, etc. fell slightly; manganese silicon rose by more than 4%, NR rose by more than 3%, EG, PTA rose by more than 2%, crude oil, rubber, etc. rose by more than 1 %, palm, soybean meal, etc. rose slightly.
- EU: The European Union had financed its recovery fund by issuing seven-year bonds through a syndicate. This issuance received more than 85 billion euros in investor demand. They were issuing bonds. Germany raised 3.908 billion euros through the renewal of two-year public bonds. The demand of 4.804 billion euros is below the target issuance scale of 5 billion euros, which analysts call a "technical failure." According to Refinitiv IFR, Germany’s past four renewals of two-year bonds have all failed. In contrast, Italy raised 5.75 billion euros through the renewal of three-year, seven-year, and 30-year bonds. The issuance generated high demand, and the winning interest rate was the lowest since February, March, and January. The Netherlands raised 1.98 billion euros through the renewal of bonds maturing in 2052. Italian government bonds have performed outstandingly after the country’s bid sale ended. The 10-year Italian government bond yield fell by nearly three basis points to 0.66%, making the closely watched Italian/German 10-year bond yield difference hit the highest level since mid-August. 98 basis points narrow.
- SW: Swiss drugmaker Roche believes that the new coronary pneumonia will likely become a seasonal and endemic epidemic, with 200 to 500 million new infections each year. In a meeting with analysts, Barry Clinch, Roche's global head of clinical development for infectious diseases, the new coronary pneumonia is likely not to become a "common cold." The virus "will gradually become easier to control" but "still needs to be controlled." An optimistic scenario of a sudden drop in cases is unlikely to occur, and a pessimistic scenario of continuous mutation of the virus that makes the disease unpredictable is also unlikely to happen. Roche and Regeneron Pharmaceuticals Inc. are also selling an antibody mixture to treat COVID-19 and are developing an antiviral drug.
- AU: Reserve Bank of Australia Chairman Lowe: The Reserve Bank of Australia is expected to stop bond purchases before inflation reaches its target. "The reason why the global CPI has risen may be due to the existence of global supply bottlenecks. Temporarily exceeding 3% of the inflation rate will not be regarded as a problem. That is something that needs to be considered later. Now we first need to make the inflation rate reach the target range of 2-3%."
• LOOKING AHEAD:
Today, investors will receive:
- USD: Empire State Manufacturing Index, Import Prices m/m, Industrial Production m/m, Capacity Utilization Rate, and Crude Oil Inventories.
- EUR: French Final CPI m/m, Industrial Production m/m, Empire State Manufacturing Index, Import Prices m/m, Industrial Production m/m, Capacity Utilization Rate, and Crude Oil Inventories.
- GBP: CPI y/y, Core CPI y/y, PPI Input m/m, PPI Output m/m, RPI y/y, HPI y/y, 10-y Bond Auction, and CB Leading Index m/m.
- CAD: CPI m/m, Common CPI y/y, Median CPI y/y, Trimmed CPI y/y, and Core CPI m/m.
- CNY: Retail Sales y/y, Fixed Asset Investment ytd/y, Industrial Production y/y, and Unemployment Rate.
- JPY: Core Machinery Orders m/m and Tertiary Industry Activity m/m.
- NZD: Current Account.
• KEY EQUITY & BOND MARKET DRIVERS:
- The yield on French 10-year government bonds fell 1.4 basis points to -0.015%.
- The yield on the 10-year British government bond fell 0.7 basis points to 0.738%.
- Italy's 10-year government bond yield fell 3.9 basis points to 0.647%.
- The Federal Reserve Bank of New York plans to purchase approximately US$80 billion of US Treasury bonds each month from September 15 to October 14.
- The three major U.S. stock indexes fell collectively. The Dow fell 0.83%, the S&P 500 fell 0.57%, and the Nasdaq fell 0.45%. . Online education stocks were among the top decliners, Gaotu fell more than 5%, and Future and New Oriental fell more than 4%. Apple fell nearly 1% after the release of the new iPhone. Bank stocks generally fell, with Bank of America, Citigroup, and Morgan Stanley falling more than 2%. Medical equipment stocks rose, Newasso Equipment rose more than 4%, Inmode rose more than 3%, and Stella Medical rose more than 2%. Most popular Chinese concept stocks fell. Alibaba, iQiyi fell more than 3%, and JD.com, Didi, and Tencent Music fell more than 2%.
- U.S. bank stocks generally closed down, following the decline in U.S. Treasury yields, after the US core CPI unexpectedly fell in August] Major U.S. bank stocks generally closed down. For example, Bank of America fell nearly 2.7%, Citigroup fell about 2.5%, Morgan Stanley fell about 2.4%, JP Morgan Chase fell more than 1.7%, Goldman Sachs fell more than 1.3%, and American Express fell more than 1.2%. On the other hand, %, Wells Fargo, which Warren of the US Senate threatened to split and fined by regulators, rose more than 0.6%.
- U.S. oil stocks generally fell. Caron Oil closed down nearly 4.4%, APA fell about 4.0%, Murphy Oil fell about 3.2%, Hess fell more than 3.1%, Phillips 66 fell 3.0%, Marathon Oil fell 2.9%, Devon Energy and Valero Energy fell more than 2.2%, Harry Potter, Chevron, Cimarex Energy, Schlumberger, BP ADR, Exxon Mobil, Occidental Petroleum CLR, ConocoPhillips fell at least 1.1%. Among ETFs, the United States Crude Oil Fund (USO) used to track international oil prices fell by more than 0.3%, the US Brent Crude Oil Fund also fell by more than 0.1%, XLE used to track oil stocks fell by more than 1.4%, and VDE fell by about 1.7%. PXE and IEO fell about 2.0%, and XOP fell 2.5%. Solar energy stocks generally fell, iSun fell 7.7%, JKS fell more than 2.9%, SunPower fell 2.7%, Array fell more than 2.6%, Azure Power fell about 2.1%, Canadian Solar (CSIQ) fell 1.7%, First Solar fell more than 0.9%. Among ETFs, TAN fell more than 0.8%, clean energy SMOG fell about 0.2%, and PBW fell more than 1.1%.
- Treasury yields fell on Tuesday after data showed that the core consumer goods in the United States in August. The price increase was the smallest in six months, indicating that inflation may have peaked and eliminated the Federal Reserve. The benchmark 10-year government bond yield fell by more than six basis points to a low of 1.263% since August 24 lowest. The core consumer price index (CPI) rose slightly by 0.1% last month. This is the smallest increase since February. As of August 1, the core CPI rose by 4.0% in two months, and in July, it rose by 4.3% year-on-year. The data in the next few months may fluctuate. The shortage of basic materials and parts has caused bottlenecks in various supply chains. The slowdown in inflation in August gave the Fed breathing room. The Fed is preparing to reduce the scale of bond purchases, Make a decision from a near-zero level. The 10-year bond yield fell 4.7 basis points at the end of the session to 1.277%. 30-year bond yield US30Y, T=RR fell 5.4 basis points to 1.850%. The yield on the two-year U.S. Treasury fell 0.6 basis points to 0.209%. The five-year/30-year bond yield spread was 106.7 basis points, the narrowest since August 2020. The narrowing of the yield gap indicates that traders have lost interest in the subject of reinflation, which is consistent with the cooling of inflation. The two-year/10-year bond yield spread was 106.6 basis points. The five-year US inflation-preserved bond (TIPS) break-even yield closed at 2.512% at the end of the session and closed on Monday
They were reported at 2.554%.
- The German 10-year bond yield fell by less than one basis point to minus 0.33%, reversing the earlier gains and following the release of the U.S. Treasury yields. Earlier, under the pressure of a series of bond offerings, the German bond yield rose to a two-month high minus 0.301%. In contrast, the difference between the two-year and 10-year German bond yields briefly widened to 39.5 basis points—the most comprehensive level since the beginning of July.
• STOCK MARKET SECTORS:
- High: Health Care.
- Low: Energy, Financials, Industrials, Materials.
• TOP CURRENCY MARKET DRIVERS:
- USD: The U.S. dollar index fell more than 20 points in the short-term to 92.37 points; the spot gold rose by more than 10 dollars in the short-term and is now at 1,792.92 dollars per ounce; the U.S. stock futures rose in the short-term, and the Dow futures are now up 0.4%. Previous data showed that the U.S. August CPI year-on-year growth rate was in line with expectations, while the core CPI year-on-year growth rate was less than expected.
- RUB: Ruble, based on trading results on Monday, rose by 0.76% to 72.6757 per dollar and became the leader in growth among emerging market currencies. Brent oil prices showed positive dynamics and, for the first time since August 2, checked strength resistance $ 74 / bbl. The Ministry of Finance, within the framework of the budget rules, buys daily currency for 14.9 billion rubles, and now this, perhaps the most significant factor of pressure on the ruble, which locally can be compensated by the demand of Russian exporters for ruble liquidity for payments to the budget within the September tax period. Increasing the key rate to 7% per annum is already taken into account by the money market. The actual profitability in the Russian Federation is positive than most competitors from the segment cannot boast of emerging markets. Therefore, the Russian currency looks capable of continuing to strengthen to 72 per dollar in the short term.
- OIL: International Energy Agency (IEA) said on Tuesday that after three consecutive months of decline in global oil demand, the advancement of new crown vaccination would release the suppression of epidemic restrictions (especially in Asia) Oil demand. "There are signs of a decrease in the number of new coronary pneumonia cases, and demand is currently expected to increase by 1.6 million barrels per day in October and continue to grow until the end of the year," the IEA monthly oil report reads. The IEA predicts that the market will rebound strongly from the fourth quarter of this year because "there is a large amount of suppressed demand and the vaccination plan continues to make progress." However, the spread of the Delta variant virus in recent months prompted the IEA to cut its overall demand growth forecast for this year by 105,000 barrels per day and increase its forecast for 2022 by 85,000 barrels per day. In addition, according to the IEA, the damage caused by Hurricane Ida to the U.S. Gulf Coast's oil-producing areas has caused global supply to drop for the first time in five months, and the potential supply loss is expected to be close to 30 million barrels.
- Platinum: prices last week again dropped below the psychological level of $ 1,000 / oz under the influence of the expected surplus of the metal in 2021. The spread between gold and platinum was $ 832 / oz, between palladium and platinum narrowed to $ 1,184 / oz. The World Platinum Investment Council (WPIC) estimates that the global platinum market will see a surplus of 190,000 ounces in 2021 as supply from mines rises, and investment demand falls. The deficit in 2020 was estimated at 883 thousand ounces. The agency expects a recovery in the primary collection of metal in 2021 by 22% y / y due to the rescue of production in South Africa (+ 33% y / y), North America (+ 8% y / y), and Zimbabwe (+ 4% y / y ). In Russia, production will decline by 12% YoY. The secondary platinum supply in the world will also grow by 17% YoY. At the same time, global metal consumption will grow by only 1% y / y due to the expected drop in investment demand by 66% y / y. Consumption of platinum in the automotive industry will rise by 22% YoY, while consumption in the rest will rise by 25%. Overland metal reserves, according to WPIC estimates, will grow by 7% y / y.
• CHART OF THE DAY:
The price of gold climbed to a one-week high on Tuesday as the US dollar fell. Before this, US inflation rose less than expected, making the timetable for the Federal Reserve to cut monetary stimulus measures uncertain. Spot gold rose 0.6% to US$1,803.35 per ounce, while US gold futures rose 0.6% to US$1,805.60 per ounce. After the U.S. inflation data was slightly weaker than expected, the price of gold hovered around US$1,800 per ounce. US core consumption in August The Consumer Price Index (CPI) rose slightly by 0.1%, lower than the 0.3% expected, putting pressure on the dollar. This is the smallest increase since February, and the increase in July was 0.3%. Inflation data may reinforce the view that the Fed may slow down its withdrawal from economic support measures and keep interest rates low. Low-interest rates reduce the opportunity cost of holding non-yielding gold. Among other metals, palladium fell 4.6% to US$1,990.19 per ounce, the lowest level since July 2020, while platinum fell 1.8% to US$943.86 per ounce.• Gold - D1, Resistance (target zone) around ~ 1824, 1861 and 1900, Support (target zone) around ~ 1784, and 1751.