Daily Update 21 July, 2021

Global Markets Update

U.S. equity markets closed higher overnight, with both the Dow Jones and NASDAQ up +1.6% and S&P 500 closing +1.5% higher. U.S. housing starts increased in June by more than forecast, with initial home construction rising +6.3% to a 1.64 million annualized rate, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.

Long-dated U.S. treasury yields were mixed, with the 2-Yr yield lower at 0.200% and the 10-Yr yield higher at 1.220%.

European markets. European equity markets closed higher overnight, with both the Stoxx Europe 600 and German DAX up +0.5%, with carmakers gaining after Biden administration officials said they’re starting to see signs of relief for the global semiconductor supply shortage, including commitments from manufacturers to make more automotive-grade chips for car companies. The U.K. FTSE 100 closed +0.5% higher.

Asian markets. Asian equity markets closed lower overnight, with the Shanghai Composite down -0.1%, after Beijing kept benchmark lending rate unchanged with the one-year loan prime rate (LPR) at 3.85% and five-year LPR at 4.65%, despite growing expectations for a cut. The Hang Seng was down -0.8% and KOSPI closed -0.3% lower. Nikkei 225 declined -1.0%, amid inflation fears with data revealing Japan’s key consumer prices inched up for a second month in June with CPI (excluding fresh food) rising +0.2% yoy due to higher energy costs. Hong Kong’s unemployment rate declined -50bps to 5.5% in June, the lowest in more than a year, with jobless rates improving across most sectors.

WTI oil is trading at US$67.48 a barrel. Iron ore price is at US$211.39 per ton. Spot gold is trading at US$1,811 per oz.

ASX performance. The ASX 200 closed -0.46% lower yesterday. According to minutes from RBA’s July meeting, the central bank said it would retain the option to increase or reduce its weekly bond purchases given uncertainty over the economic outlook.

Oil Search Ltd (OSH) gained +6.3%, after rejecting an initial A$22bn takeover approach from Santos and saying it’s open to engaging on any proposal that’s in the interest of its shareholders.