• GLOBAL CAPITAL MARKETS OVERVIEW:
The major Wall Street stock indexes closed at a low on Monday. The Dow Jones Index fell about 250 points, the Standard & Poor’s Index fell 0.7%, and the Nasdaq Index fell 0.6%. The rebound in some commodity prices once again triggered concerns about continued inflation and the global economic slowdown. Worries. WTI crude oil futures soared to a 7-year high, China's coal futures set a new record, and aluminum futures jumped to an 11-year high. In addition, market participants evaluated a news report that China is stepping up its crackdown on banks. At the same time, traders are waiting for the financial reporting season to begin. Major banks will announce their third-quarter financial reports this week. The minutes of the Federal Open Market Committee meeting announced on Wednesday will become the focus of attention for any clues to the Fed's timetable reduction. The market expects some announcements next month. European stock markets closed mixed on Monday. After a week of turbulence, investors are looking for directions before the upcoming earnings season in the case of rising inflation expectations. In addition, after European Central Bank policymakers discussed the possibility of exiting monetary and fiscal support measures during the pandemic last week, the market has bet the European Central Bank to raise interest rates together with other central banks such as the Federal Reserve and the Bank of England in recent weeks. Oil and mining stocks rose, while commodity prices such as oil and iron ore rose. On the corporate side, negotiations on the merger between Auchan and Carrefour have stalled due to valuation and transaction structure. The Italian FIM-CISL alliance said on Friday that the global semiconductor shortage would cause a more severe and longer-lasting blow to the production of Stellattis than the new crown epidemic. Germany's DAX closed flat, Italy's FTSE MIB and Spain's IBEX fell, France's CAC 40 and Britain's FTSE 100 rose. CAC 40 reversed its early decline and closed at 6,571 points on Monday, up 0.2%, as the stock prices of ArcelorMittal and Renault rose more than Carrefour's decline. At the same time, market sentiment continues to be dominated by concerns about inflationary pressures and the prospect of slowing global growth and rising interest rates. Investors are currently waiting for the start of the third quarter financial reporting season in the United States to weigh the impact of supply chain disruption and rising costs on corporate profits. The FTSE 100 index rose by more than 0.7% on Monday to close at 7147 points. The rise in weighted mining and energy stocks offset concerns about inflation and interest rate hike bets. Financial stocks also rose after the UK benchmark 10-year bond yield rose to its highest level since May 2019. Policymaker Michael Saunders stated that investors were right to bet that borrowing costs would grow faster, while Governor Andrew Bailey warned that inflation would be "very high unless officials acted." Destructive" period. Elsewhere, the Brexit minister will seek to amend the agreement on trade flows with Ireland, as Britain and the European Union will continue negotiations on Northern Ireland this week. As the energy crisis approached China, the Shanghai Composite Index closed at 3592 points on Monday, while the Shenzhen constituent stock index fell 0.32% to close at 14,368 points. On Monday, Liaoning, the largest provincial economy in China's Rust Belt Industrial Zone, issued warnings of increasing power shortages. The power shortage was caused by the surge in energy demand and the tight coal supply during the post-epidemic recovery period. According to reports, reducing power consumption will increase economic pressure, suppress GDP growth in 2022, and threaten the spillover effects of production and supply chains. At the same time, China's real estate bonds plummeted on Monday as Modern Real Estate requested to extend its maturity debt to avoid potential defaults, highlighting the continued liquidity pressure faced by Chinese developers. The Hang Seng Index rose 2% to around 25,300 on Monday, outperforming the main average in the Asia-Pacific region after the Chinese government imposed a lower-than-expected fine on food delivery giant Meituan. This decision, to some extent, allayed investors’ concerns about Beijing’s antitrust crackdown on large Chinese technology companies. As the Beijing government tried to change the technology business model to adapt to the "shared prosperity" movement of President Xi Jinping, China's technology valuation continued to be sluggish, and this field has become China's goal for nearly a year. According to reports, a company led by Warren Buffett’s long-term partner Charlie Munger doubled the Alibaba stock listed on the US Alibaba Group. Tencent soared 8% and 2% on the Hong Kong Stock Exchange. At the same time, the Shanghai Composite Index closed unchanged, closing at 3592 points. On Monday, the Nikkei 225 index rose 449 points or 1.6% to close at 28,498 points, continuing the third trading day's gains. As the yen fell to 2018 lows, Japanese Prime Minister Fumio Kishida said on Monday that the government would take measures to redistribute wealth by increasing corporate wage incentives rather than raising capital gains taxes, and the market has performed strongly. The new prime minister made the clarification mentioned above while questioning the opposition party in parliament. He also stated that he plans to lay a solid foundation for the economy through bold monetary easing, flexible fiscal measures, and growth strategies. At the same time, a survey conducted by the Bank of Japan shows that Japanese households expect prices to rise in a year and economic conditions will deteriorate. The Standard & Poor's/ASX 200 Index erased the previous trading day's gains. On Monday, the Asia-Pacific region fell below 7,260 points, or 0.9%, in early trading, even though Sydney reopened. Due to the spread of the delta mutant virus, Australia's largest city has undergone a strict lockdown for 100 days. The country hopes to coexist with the coronavirus by increasing vaccination and gradually reopening. These developments are expected to boost consumer and corporate sentiment, and confidence surveys will be conducted in the coming days. In addition, Australia’s employment data is expected to be released this week. It is generally predicted that 120,000 people will be unemployed in September after 146,300 people were lost due to the lockdown in August.
• REVIEWING ECONOMIC DATA:
Looking at the last economic data:
- RU: Preliminary estimates show that Russia’s current account surplus has expanded from US$3.9 billion in the same period last year to US$40.8 billion in the third quarter of 2021. This is the most significant current account surplus since records began in 1994. The goods surplus increased sharply from 18.8 billion US dollars a year ago to 56.8 billion US dollars, and exports increased by 70.8% to 134.9 billion US dollars. Sales of products (104.7%) and natural gas (152.9%) increased. However, import growth slowed by 29.7% to US$78.1 billion. At the same time, the service deficit increased from 3.6 billion U.S. dollars to 4.6 billion U.S. dollars; the investment income gap rose slightly from 9.5 billion U.S. dollars to 9.6 billion U.S. dollars, and the secondary income gap rose from 1.6 billion U.S. dollars to 1.8 billion U.S. dollars. Considering the first nine months of 2021, the country’s current account surplus has increased from 29 billion US dollars in the same period last year to 82.2 billion US dollars.
- EU: The Financial Times MIB fell below 26,000 points on Monday, the same level as its European counterparts, as concerns about slowing global economic activity and rising inflation have reappeared, suppressing the possibility of interest rate hikes. On the company side, Enel (-1.9%), Prysmian (-1.1%) and Terna-Rete Elettrica Nazionale (-1.1%) were the biggest losses. At the same time, as the price of crude oil is higher than US$81 per barrel, stocks in the oil sector such as Tenaris (up 1.7%), Eni Group (up 1.4%), and Septem Group (up 1.4%) Continue to rise.
- EU: In August 2021, Italian industrial production contracted 0.2% from the previous month, after rising 1% in the last month, while the market expects a decrease of 0.3%. The output of energy (-2.1% in July, -1.5% in July), consumer goods (2%, -0.9% in July), and intermediate products (1.3%, -1.6% in July) declined, while capital The growth of products (0.8%, -1.9% in July) slowed. On an annual basis, industrial production remained unchanged after rising 7.2% in July.
- CN: On October 11, 2021, the People's Bank of China provided a seven-day reverse repo for a total of RMB 10 billion at an interest rate of 2.2%. This is the third injection in four days, after a week of vacation. The central bank stated that the move aims to maintain reasonable and adequate liquidity in the banking system.
• LOOKING AHEAD:
Today, investors will receive:
- USD: FOMC Member Evans Speaks, NFIB Small Business Index, JOLTS Job Openings, FOMC Member Clarida Speaks, FOMC Member Bostic Speaks, and 10-y Bond Auction.
- EUR: German WPI m/m, ZEW Economic Sentiment, and German ZEW Economic Sentiment.
- GBP: BRC Retail Sales Monitor y/y, Average Earnings Index 3m/y, Claimant Count Change, and Unemployment Rate.
- JPY: Bank Lending y/y, PPI y/y, and 30-y Bond Auction.
- NZD: Visitor Arrivals m/m.
- AUD: NAB Business Confidence.
• KEY EQUITY & BOND MARKET DRIVERS:
- The Japanese stock market rose 391 points. Kawasaki Kissen (3.87%), Nissan (3.56%), and T&D Holdings (3.36%) drove this growth.
- Italy's 10-year government bond yield rises to a 15-week high of 0.9284%.
- Investors remain cautious as the surge in oil prices to 2014 highs has triggered concerns about a global economic slowdown and soaring inflation, and Wall Street's volatility continues to dominate. Traders are also waiting for the start of the earnings season, and significant banks will announce their third-quarter earnings this week. At the same time, the minutes of the Federal Open Market Committee meeting scheduled to be announced on Wednesday will be the focus of attention to get any clues to the Fed's cutback schedule. The market expects some announcements next month.
- The benchmark Japanese 10-year Treasury bond yield rose to 0.094% in mid-October, the highest level since April, consistent with the general rise in U.S. Treasury bond yields, as people are increasingly worried about rising commodity prices leading to soaring inflation. In addition, according to a survey conducted by the Bank of Japan, Japanese households’ inflation expectations for the next year have increased in the three months ending in September, and economic prospects have also deteriorated. As a result, Japan was in a state of deflation for 11 consecutive months in August, far from reaching the Bank of Japan’s 2% target.
- Germany's benchmark bond yield rose to over -0.15% in October, the highest level since May. The rebound in oil prices intensified concerns about inflationary pressures and increased expectations that the world may tighten monetary policy. Traders now see that the European Central Bank will raise interest rates by ten basis points before the end of 2022. However, President Lagarde said she still expects supply shortages or energy price increases to be temporary to ease market concerns about inflation. Elsewhere, the Federal Reserve is expected to reduce its massive bond purchase program in November, and the Bank of England may raise interest rates as early as this year.
- The ruble-based Russian Moxs Index rose 0.7% on Monday to close at 4267 points, hitting an all-time high of 4273 points earlier, driven by soaring energy prices. Brent crude oil (Brent crude oil), the global benchmark for Russia's primary export commodities, hit a high of more than $84 per barrel in more than three years, thanks to the prospect of solid demand for power generation fuel and supply concerns. At the same time, investors are betting that the Central Bank of Russia will raise interest rates by 50 basis points at its October 22 meeting in response to inflation. On the corporate side, the forestry group Segezha's shares rose nearly 5% after the group agreed to acquire Inter-Forest company from Bonum Capital investment company for US$515 million. This transaction will increase Bonum’s Segezha Shares.
• STOCK MARKET SECTORS:
- High: Materials, Real Estate.
- Low: Communication Services, Utilities, Financials.
• TOP CURRENCY & COMMODITIES MARKET DRIVERS:
- BTC: The crypto bull market continues, with Bitcoin trading volume exceeding $57,000, the highest level since May 12, not far from the all-time high of nearly $65,000. After Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), stated that the United States will not follow China’s ban on digital tokens, virtual currencies have risen by 30 in October due to concerns about stagflation and slowing economic recovery. %above. Earlier this year, China banned cryptocurrency trading, and El Salvador launched digital currency as legal tender, which caused turmoil and caused turmoil in the entire crypto market.
- AUD: Driven by rising commodity prices, the Australian dollar rose above US$0.73, the highest since September 14. Increasing oil and iron ore prices helped the Australian dollar rebound, as the Australian dollar has been rebounding since the beginning of October. Still, investors remain cautious, believing that possible energy shortages and other risks from Chinese real estate will not help the Australian dollar in the coming Australian summer Emotions before. At the same time, the nationwide increase in vaccination rates and the relaxation of pandemic-related restrictions on the East Coast support hopes for economic growth, as restaurants and gyms welcome fully vaccinated guests after a nearly four-month lockdown.
- CAD: In mid-October, the Canadian dollar rose, trading below $1.25, close to the three-month high of 1.247 reached on July 30. Investors expect that the Fed will soon begin to withdraw from the stimulus plan, and the resulting strengthening of the US dollar offset the rebound in oil prices. The oil price, Canada's main export product, hit a new high in 2014 amid increasing demand and supply concerns. At the same time, better-than-expected employment data promoted the prospect of a downward revision of the Bank of Canada bond-purchase plan at the end of this month.
- RMB: In October, China’s offshore RMB exchange rate against the U.S. dollar stood at 6.45, not far from the two-week high of 6.43 hit earlier this month. After the weekend talks with senior Chinese and American officials, expectations for the possible partial cancellation of trade tariffs in the United States continued to rise. . In addition, after the People's Bank of China withdraws cash from the banking system, the onshore interbank money market has tightened liquidity conditions and provided some support. In other respects, as the Federal Reserve will gradually reduce its massive stimulus plan next month, the U.S. dollar is still close to a one-year high.
- EUR: The euro changed hands at $1.155 in October, hovering at its lowest level since July 2020, due to concerns about inflationary pressures caused by rising energy prices and the prospect of global policy tightening. The Federal Reserve may begin to reduce asset purchases in November and raise interest rates next year, while the Bank of England may raise interest rates as early as this year. Traders also expect that the European Central Bank will raise interest rates by ten basis points by the end of 2022. However, President Lagarde said she still expects supply shortages or energy price increases to be temporary to ease market concerns about inflation.
- USD: The US dollar index rose to 94.3 on Monday, remaining at the level since September 2020. Friday’s disappointing employment report did not change the market’s expectation that the Fed will soon begin to reduce stimulus measures. Traders expect that the Fed will announce a gradual reduction in a scale starting next month as the economic recovery continues. However, the speed has slowed down, and inflationary pressures are still rising. The minutes of the Federal Open Market Committee meeting due on Wednesday will be closely watched to learn more clues about the Fed's next move.
- RUB: The ruble-to-dollar exchange rate is 71.6, the highest level since mid-June. It is expected that the Russian central bank will raise interest rates later this month, and energy prices will rebound. Policymakers are expected to increase interest rates by 50 basis points when they meet on October 22 to resolve the inflation problem, while Brent crude oil hit a more than three-year high of $84 per barrel due to increased demand and supply concerns.
- GBP: The pound appreciated by more than $1.36 in October, further away from the nine-month low of $1.341 hit earlier this month, as the market expects the Bank of England to raise interest rates faster than expected. Official Michael Saunders stated that investors were right to bet that borrowing costs would grow more quickly. At the same time, Governor Andrew Bailey warned that inflation would be a " Very destructive" period unless policymakers act. At the same time, due to the soaring energy prices and worker shortages after Brexit and the new crown epidemic, worries about the British economy have intensified.
• CHART OF THE DAY:
The FTSE MIB fell 0.5% on Monday to close at 25,930 points, partially offsetting the 1.7% increase last week, as concerns about slowing global economic activity and rising inflation reappeared, suppressing the possibility of interest rate hikes. On the corporate side, the Italian FIM-CISL Alliance said on Friday that the global semiconductor shortage will have a greater impact on Stellattis production than the COVID-19 pandemic and will last longer. At the same time, investors pay close attention to the third-quarter earnings season to assess the impact of rising input costs on the company. Mediobanca (-3.2%), Enel (-2.5%) and Azimut Holding (-2.2%) were the biggest losses. On the other hand, stocks in the oil sector such as Tenaris (up 2.4%), Eni Group (up 1.1%), and Sepem Group (up 0.8%) continued to rise on Friday, and crude oil prices touched 2014 The recent highs in China have been affected by stronger demand and supply concerns.• Italy FTSE MIB Index - D1, Resistance (target zone) around ~ 26536, Support (consolidation) around ~ 25373 & 24656.