Daily Update 6 October, 2021

Global Markets Update

U.S. equity markets closed higher overnight, with the Dow Jones up +0.9%, S&P 500 up +1.1% and NASDAQ gaining +1.3%, after data revealed U.S. service providers expanded at a faster-than-expected pace in September, supported by a pickup in business activity and durable growth in new orders, however, difficulty in hiring and ongoing logistics challenges left inventories depleted with a gauge of inventories dropping to its lowest level in more than a year and order backlogs growing.

Long-dated U.S. treasury yields were higher, with the 2-Yr yield at 0.286% and the 10-Yr yield at 1.533%.

European markets. European equity markets closed higher overnight, with the Stoxx Europe 600 up +1.2%, U.K. FTSE 100 up +0.9% and German DAX gaining +1.1%. Growth momentum in the euro area’s service sector slowed markedly in September, with input costs rising at the fastest rate since mid-2008, while prices charged rising to the highest in more than 20 years, and a gauge measuring hiring dropping to a four-month low.

Asian markets. Asian equity markets closed mostly lower overnight, with the Hang Seng up +0.3%, KOSPI down -1.9% and Shanghai Composite remaining closed for a holiday. Nikkei 225 was down -2.2%, amid market disappointment with a new government with support for Japanese Prime Minister Fumio Kishida at 49% in a survey by a major newspaper, the lowest for a new leader in 13 years and an ominous sign as he heads into a national election on October 31. Oxford Economics lowered its 2021 (8% from 8.4%) and 2022 (5.4% from 5.8%) growth projection for China amid Evergrande’s debt troubles, electricity shortage and production halts.

WTI oil is trading at US$79.17 a barrel. Iron ore price is at US$116.81 per ton. Spot gold is trading at US$1,760 per oz.

ASX performance. The ASX 200 closed -0.41% lower yesterday. RBA kept its monetary policy settings unchanged with the cash rate at 0.1%, sticking to its projection that its first-rate hike will only take place in 2024 at the earliest and betting there’s enough stimulus to foster an economic recovery ahead of a gradual reopening of Sydney and Melbourne as vaccination rates climb.