• GLOBAL CAPITAL MARKETS OVERVIEW:
The US stock market finished trading on Thursday in different directions due to strengthening the sectors of consumer services, telecommunications, and technology. The market demonstrates against the background of negative dynamics from the outside in raw materials, oil and gas, and utilities. At the close in New York, the Dow Jones fell 0.18%, the S&P 500 fell 0.15%, and the NASDAQ Composite was up 0.11%. Salesforce Inc was the top performer among the Dow Jones index components, which gained 1.64% or 4.20 points to close at 260.36. McDonald's Corporation rose 0.93% or 2.23 points to end at 243.21. Home Depot Inc rose 0.91% or 3.02 points to close at 336.39. The biggest losers were Goldman Sachs Group Inc, which fell 1.31% or 5.27 points to trade at 396.68 at the close. Dow Inc was up 1.21% or 0.73 points to end at 59.47, while Merck & Company Inc was down 0.84 points (1, 15%) and ended trading at 71.97. The leaders of growth among the components of the S&P 500 index at the end of today's trading were shares of Macy's Inc, which rose 3.80% to 22.12, Nordstrom Inc, which gained 3.44%, to close at 27.93; and American Airlines Group, which rose 2.63% to end at 19.89. The biggest losers were Freeport-McMoran Copper & Gold Inc, which fell 6.64% to close at 34.30. Arconic Corp shed 5.45% to end the session at 32.95. Newmont Goldcorp Corp was down 3.95% to 55.43. Aeye Inc, which gained 35.28% to 9.74, and Elite Education Group International Ltd, which gained 34, were among the growth leaders among the components of the NASDAQ Composite index at the end of today's trading. 02% to end at 7.840 and Leap Therapeutics Inc which rose 31.09% to end 2.5300. The biggest losers were Vera Therapeutics Inc, which fell 27.22% to close at 22.27. MacroGenics Inc shed 23.76% to end the session at 20.99. Silverback Therapeutics Inc was down 23.08% to 12.5. European stocks rose on Thursday, and travel stocks ended their four-day decline after the airline Ryanair raised its long-term passenger traffic forecast, offsetting concerns about China's economic slowdown. The pan-European STOXX 600 index rose 0.4%, rebounding after hitting a six-week closing low on the previous trading day. Travel and leisure stocks jumped 3.4%. After raising its long-term passenger traffic forecast, Ryanair, Europe's largest budget airline, jumped 7.9% in its stock price. Competitors easyJet, British Airways' parent company International Aviation Group (IAG), and Wizz Air rose between 3.9% and 7%. Today the European market rebounded slightly, unaffected by the weakness of the Asian market, and some of the travel stocks rose well. They got a respite after Ryanair’s announcement. Asian stocks are under pressure. Investors worried about the Chinese economy and dragged down by the debt-laden real estate developer China Evergrande Group; European stock markets rose, and strong US data strengthened optimism about the recovery of the world's largest economy. Mining companies such as Rio Tinto, Anglo American, and Australian mining giant BHP Billiton are the biggest drags. Metal prices fell after China reiterated its plan to release more metal reserves. German auto supplier Continental Group shares plunged 6.2%, the largest decline among the STOXX 600 index stocks after its subsidiary Vitesco was spun off. The index of utility stocks was flat, falling nearly 3% on Wednesday. Spain passed emergency measures earlier this week to reduce energy bills, which has raised concerns that utility companies’ profits will be hit. The British FTSE index rose 0.16%, the German DAX index rose 0.23%, and the French CAC-40 index rose 0.59%. Japanese stocks closed down for the second consecutive trading day on Thursday, as investors continued to take profits. Earlier expectations about the new prime minister boosted the rise of Japanese stocks. The Nikkei index closed down 0.62% to 30,323.34 points. It had risen by 0.36% earlier in the session, while the top stock index fell 0.3% to 2,090.16 points. The Nikkei index fell after closing the positive line for 12 consecutive days. Since Prime Minister Yoshihide Suga announced his plan to resign on September 3, the Japanese stock market soared. The market is hoping that the new leadership will adopt new economic stimulus measures. Shipping stocks led the decline, down 1.61%; real estate stocks fell 1.54%. Glass, ceramics, and copper stocks fell by 1.51%. Technology heavyweights constituted the biggest drag on the Nikkei Index. Tokyo Electronics fell 3.05%, SoftBank Group fell 1.39%, and Advantest fell 3.23%. On the other hand, energy stocks tracked the overnight gains of US peers due to rising crude oil prices. The refiner sector rose 2.14%, while oil exploration companies rose 1.8%.
• REVIEWING ECONOMIC DATA:
Looking at the last economic data:
- US: Next week, on September 21-22, the next meeting of the FOMC on the interest rate will take place. The meeting will be indicative of the regulator's attitude to the continuation of the quantitative easing policy.
- US: Although the shortage of products caused by the Delta virus has prevented many Americans from consuming at retailers, retail sales in the United States unexpectedly rose in August, indicating strong demand. Data released by the US Department of Commerce on Thursday showed that after being revised downward to -1.8% in July, overall retail purchases rose by 0.7% in eight months. Excluding auto sales, sales rose 1.8% in August, the most significant increase in five months. Specifically, US retail sales rose 0.7% month-on-month in August, Bloomberg expected -0.7%, the previous value -1.1%. In terms of breakdown indicators, the increase in purchases in many categories offset the weakening of demand for automobiles. Due to ongoing transportation problems and shortages, automakers are unable to meet customer needs. In addition, due to the global chip shortage, the inventory of car dealers is decreasing. Consumer spending is the largest source of US economic demand. After the news was released, the US dollar index rose by 5 points in the short term and is now at 92.83; spot gold fell by about US$4 in the short time and is now at US$1,764.96 per ounce.
- US: The yield on 10-year US government bonds rose three basis points to 1.31%. Insiders claim that US President Biden will approve Powell as head of the Fed for a second 4-year term. Next week 21-22. September, after a two-month break, the next meeting of the FOMC on the interest rate will take place. Powell's term expires at the end of January 2022, a year after the presidential elections and Biden's inauguration. Keeping Biden as head of the Fed means more predictability of the future monetary policy of the regulator, relative to the measures already taken during the pandemic. We do not expect any changes in the interest rate from the Fed after the meeting of the FOMC. Still, this meeting promises to indicate the regulator's attitude to the continuation of the policy of stimulating the economy through a quantitative easing program. The Fed's position at this meeting on rolling back quantitative easing will reflect the direction of the Fed's policy until the end of 2021. US Treasury 10-year yields rose marginally on Wednesday. 2-year yield: +1 bp. up to 0.214% per annum, 10-year yield: +2 bp up to 1.307% per annum, 30-year yield: +1 bp up to 1,872% per annum
- EU: the European Commission announced the establishment of the EU health emergency preparedness and response agency on the 16th to "prevent, detect and quickly respond to health emergencies." The European Commission issued a statement that day that the agency will use intelligence collection and establish the necessary response capabilities to predict threats and potential health crises. The agency will also ensure the development, production, and distribution of drugs, vaccines, and other medical supplies (gloves and masks).
- EU: The EU will invest in blockchain, data infrastructure, and high-performance computing, as it spends billions of euros to promote the entire EU's technology development activities a part of. These projects will be distributed in several EU countries and will increase efforts to manufacture semiconductors. However, the European Commission has not stated how much money will be invested in each technology area.
- EU: The European Commission President Von der Lein said that about one-fifth of the 750 billion euros (887.0 billion US dollars) new crown epidemic recovery fund would be used. Used to develop digital technology, digital technology is the "key to success" in the region. Officials hope to invest directly in the following areas by 2030: data infrastructure, low-power processors, 5G communications, high-performance computing, secure quantum communications, public administration blockchain, digital service innovation, and investment in people’s digital skills.
- UK: The National Bureau of Statistics of the United Kingdom said on Thursday that payment card spending in the UK rose sharply last week, reaching 99% of pre-epidemic levels, up from 93% the week before. According to the National Bureau of Statistics, as of September 3, job advertisements listed on the online portal Adzuna rose to 128% of the February 2020 level, increasing 2% from the previous week.
• LOOKING AHEAD:
Today, investors will receive:
- USD: Prelim UoM Consumer Sentiment, and Prelim UoM Inflation Expectations.
- EUR: Final CPI y/y, Current Account, and Final Core CPI y/y.
- GBP: Retail Sales m/m and Consumer Inflation Expectations.
• KEY EQUITY & BOND MARKET DRIVERS:
- Nasdaq wins during the rollercoaster session.
- S&P 500 follows the 50-day moving average (4434) for the third day in a row.
- The CBOE Volatility Index, based on S&P 500 options trading, was up 2.81% to trade at 18.69.
- Gold Futures for December delivery was down 2.28% or 40.85 to $ 1,753.95 a troy ounce. For other commodities, WTI crude oil futures for October delivery remained virtually unchanged 0.00%, or 0.00, to $ 72.61 a barrel. For November delivery, futures contracts for Brent oil rose 0.25%, or 0.19, to trade at $ 75.65 a barrel.
- The August CPI announced by the United States was flat year-on-year and lower than expected. In addition, the core CPI was lower than anticipated year-on-year, alleviating market concerns about inflation. Affected by this, U.S. Treasury yields fluctuated downward. As of the close, 10 The yield on the 10-year US Treasury bond fell 4.2BP from the previous trading day to close at 1.284%.
- There is no critical data released in Europe. European stock markets ended their rally, and most of them fell. Risk aversion in the market rebounded. Affected by this, the yield of German government bonds fluctuated downward. As of the close, the yield of 10-year German government bonds fell from the previous trading day. 0.9BP, closed at -0.340%.
- In the US dollar interest rate swap market, the interest rate swap rate declined as a whole. The 2-year swap rate fell by 0.31BP from the previous trading day to 0.3112%; the 10-year swap rate fell by 3.82BP from the prior trading day to 1.3117%; the 30-year swap rate decreased from the previous trading day 3.64BP, reported 1.6140%.
- On the eve of the price of natural gas again set new records: the price of gas in the Henry Hub tested $ 5.6 / MMBtu, in the gas hub in the Netherlands, the spot price rose to $ 24.5 / MMBtu, in Japan, the spot price exceeded $ 19.0 / MMBtu. The rise in prices began in the second half of 2021 and escalated into a real rally in the third quarter of this year. The sharp rise in prices has turned the gas market into a hot topic for discussion in the media and expert communities, making consumers nervous ahead of the coming winter. There are different versions of the rise in prices on the gas market. Particularly politically engaged observers associate the gas market shortage with Russian suppliers who do not want to increase supplies. Let's analyze the market and see how correct the different versions of what is happening are. We note right away that the rise in prices is observed in the spot part of the gas market, while the value of long-term contracts is growing more smoothly and not so much. Thus, the company "Gazprom" reported that the weighted average cost of gas supplies to Europe in 2021 will amount to $ 270 per 1,000 cubic meters. In the first half of 2021, the LNG market saw consumption growth by 4.4% y / y, with the main source of growth in Asia. The main increase in LNG supply was seen in the United States, which increased supplies by 38% YoY due to the launch of new projects in Freeport, Cameron, and Corpus Christi. However, LNG supplies in Q2. 2021 declined 4% YoY due to limited supply due to a series of maintenance outages in Australia, Norway, and the United States. The current stormy weather in the Gulf of Mexico has strongly impacted the domestic American gas market but is limited to the global market due to small supply volumes. For eight months. In 2021, the supply of LNG in the world increased by 5.8% y / y. The main growth was observed in the USA (+ 58% y / y). Growth also occurred in Malaysia (+ 11% YoY) and Angola (+ 8%). Russia saw a 2% y / y decline in LNG production. The fall also occurred in Indonesia (-6% y / y), Nigeria (-15% y / y). During this period, demand in China increased by 23% y / y, South Korea - by 15% y / y, Japan - by 7% y / y. Latin American demand rose 72% YoY, while shipments to Europe fell by about 20%.
• STOCK MARKET SECTORS:
- High: Consumer Discretionary, Information Technology, Real Estate.
- Low: Energy, Materials, Consumer Staples.
• TOP CURRENCY MARKET DRIVERS:
- EUR: EURUSD fell to 1.1750 for the first time since the end of the summer. Retail sales in the US rose unexpectedly by 0.7% last month (with a forecast of a decline of 0.7%). In part, this jump reflected an increase in purchases to prepare children for school and pay tax breaks for children. However, the positive was overshadowed by a significant downward revision of July data: retail sales in July fell not by 1.1% m / m but by 1.8% m / m. Overall, statistics have eased concerns about a slowdown in economic growth due to the delta strain. However, retail sales figures do not rule out that the Fed may announce a plan to curb incentives next week on September 22.
- RUB: The ruble corrected against the dollar but strengthened its position against the euro. At the moment, the euro weakened to 85.21. The OFZ market may be under pressure in the short term due to the ongoing acceleration of inflation. According to Rosstat, annual inflation accelerated to 6.87% by September 15. By the time the decision was made on the rate, the Central Bank of the Russian Federation had estimated inflation at 6.74%, and by August 30, it was 6.68%. Thus, the dynamics of the acceleration of price growth persist, increasing the likelihood of a rate change at the October meeting. The situation is further complicated by the fact that deflation was observed in early September a year ago. In the short term, this is negative for the ruble exchange rate, but a potential rate hike to 7.0% will increase its yield comparable to other currencies.
- AUD: The Aussie weakened 0.2% on the back of falling industrial metals and a new year low for iron ore futures in China. Meanwhile, the unemployment rate in Australia fell to 4.5% in August, while growth was expected to be 4.9%. However, the Bureau of Statistics noted that such dynamics are more related to reducing the working-age group than real employment change.
- OIL: Oil continues to hold above $ 75 a barrel. However, the idea of a correction is beginning to form in the market. Production in the Gulf of Mexico continues to recover. Work accelerated after tropical storm Nicholas weakened. Accordingly, production is expected to recover to 85% -90% of potential volume by the end of the week. Therefore, in the foreseeable future, the oil will be under pressure from the traditional seasonal factor. From the end of September to the beginning of November, American refineries are carrying out preventive work with restructuring for the winter mode, which leads to lower demand for oil.
• CHART OF THE DAY:
The New Zealand dollar strengthened against the US dollar in Asian deals on Thursday, September 16, in response to data on economic growth. New Zealand's GDP grew in the 2nd quarter of 2021 by 2.8% QoQ and 17.4% on a YoY basis. The figures turned out to be noticeably better than forecasts (+ 1.1% QoQ and + 16.1% YoY) and the indicators of the first quarter (+ 1.4% QoQ and 2.9% YoY). As a result, the yield on 10-year New Zealand bonds increased by three bp. to 1.88%, and the overnight rate swap market grew to a 36% probability of a 50 bp hike in the key rate. A day earlier, the likelihood of such an increase was estimated at 12%. As a reminder, the Reserve Bank of New Zealand promised a 25 bps increase in October. And hinted that a rise of 0.5% is possible at once.• NZD - D1, Resistance around ~ 0.71009, Support (target zone) around ~ 0.69383 and 0.67848