US Session (09/05/2021)
When investors analyzed the status of the economy ahead of major payroll data on Friday, stocks recovered from Monday's fall and Treasuries sank.
The S&P 500 and NASDAQ 100 gained, led by advances in mega-cap tech names, while the 10-Year yield spiked to 1.53%. Investors are anxiously awaiting the latest labor market data for a signal on the Fed’s next move.
An ISM reading for the US services sector came in better than predicted on Tuesday, putting the Fed on track to announce a reduction in bond purchases.
The S&P 500 surged back above its 100-day moving average, easing fears of a market downturn. A wall of anxiety has been erecting due to rising inflation, fading economic indications, a developing energy problem, and political wrangling in the US.
The rise occurred after a gauge of the NASDAQ 100's relative strength sank to its lowest level since March.
Rising inflation and government rates have driven a rotation out of peak-growth businesses trading at a premium, with the S&P 500 information technology sector down around 6% from its August high. Yet, as Europe faces a winter energy shortage, the energy sector is up 17% from its September low. On Tuesday, European natural gas contracts hit an all-time high of €114 per megawatt-hour, up from €15.49 in February. For the fourth day in a row, crude oil in New York has risen.
The dollar gained ground after a three-day slide. Bitcoin's rise continued, topping the $50,000 level. but European and Hong Kong stocks soared, while Japanese stocks sank.
Asia Session (09/05/2021)
Asian equities fell on Wednesday, while treasury yields rose as traders evaluated the economic rebound against the prospects of rising inflation fueled by rising energy prices. The value of the dollar increased.
Shares slid in Japan, Hong Kong, South Korea and Australia. the regional performance contrasted with an overnight wall street rebound spurred by bargain-hunting for technology stocks, which had endured the brunt of a recent selloff. S&P 500 and NASDAQ 100 futures declined.
The 10-year Treasury yield rose to 1.55%, while the 30-year yield hit its highest level since June. Faster-than-expected service-sector activity in the United States, as well as price pressures from skyrocketing crude oil and natural-gas prices, are bolstering the case for a reduction in the Federal Reserve's bond-buying program. For further clues on the outlook, traders are waiting for labor market statistics later this week.
Concerns over China's highly leveraged property industry continue to cast a pall over the country's overall mood. The markets around the country are closed for the holiday and will reopen on Friday. New Zealand raised interest rates for the first time in seven years and hinted at more hikes, whipsawing the currency.
Europe Session (09/05/2021)
Dip buyers returned to technology stocks in Europe and the United States, thinking that the selloff had gone too far. Facing a supply shortage, energy contracts continued to rise.
The Nasdaq 100 index's December futures gained 0.4% after the digital-heavy index fell to its lowest level since June on Monday. For the first time in eight days, the technology component of Europe's benchmark Stoxx 600 gained. European natural-gas futures soared by as much as 16 percent, while West Texas Intermediate crude oil climbed to a seven-year high.
A rising wall of concern in global markets has broken the calm, encompassing China's debt problem, increased inflation due to commodities supply shocks, fading economic growth, and US political squabbling. The volatility comes as markets anticipate the Federal Reserve's withdrawal of support.
Today, European natural gas contracts hit an all-time high of €111.70 per megawatt-hour, up from €15.49 in February. The continent is preparing for a winter energy shortage, with front-month power contracts in Germany reaching new highs.
European markets rose, with banks and technology companies leading the charge. After receiving regulatory permission to increase its investment in Delivery Hero, Prosus climbed as much as 2.9%.
Wednesday FX Option Expiries
USD/CAD: 1.2550 ($1.36B), 1.2600 ($958M), 1.2720 ($905M)
EUR/USD: 1.1725 (EU440.1M), 1.1700 (EU410.3M), 1.1620 (EU364.9M)
USD/JPY: 108.20 ($850M), 109.50 ($450.9M)
AUD/USD: 0.7300 (AUD741.9M), 0.7200 (AUD508.5M), 0.7325 (AUD432.8M)
USD/MXN: 19.92 ($400M)
NZD/USD: 0.7000 (NZD2.21B)
USD/KRW: 1180.00 ($347M)