US Session (10/11/2021)
The rise in oil costs drove stock volatility as the debate over whether inflationary pressures are temporary or will derail the economy heated up. Traders also weighed in on a claim that China is broadening its campaign to include banks.
In a light trading day, the S&P 500 gave up previous gains and fell for the second time in a row. With a rising power crisis from Europe to Asia stimulates demand for oil ahead of winter, west Texas intermediate crude soared above $80 a barrel for the first time since late 2014. Aluminum has reached a 13-year high. While the cash market was closed for Columbus Day, Treasury futures declined.
After tightening their grip on industries ranging from private education to digital gaming, housing, and insurance, investors have been on the lookout for what China's authorities could target next. Nevertheless, traders have been concerned by the commodities boom, with supply constraints complicating the outlook for policymakers trying to strike a balance between the removal of support and fears that growth has peaked.
The third-quarter earnings season begins this week with financial firm reports. That, according to economists, will be the next major test for the stock market at a time when macroeconomic concerns are generating doubts about how much further values can be stretched.
Elsewhere, Bitcoin surpassed $57,000 for the first time since May, owing to a variety of factors, including reduced concerns about regulatory actions in the US and China, as well as increased confidence about a prospective SEC approval of a cryptocurrency ETF (Exchange-Traded Fund).
Asia Session (10/11/2021)
Asian equities slumped as investors worried about elevated inflation caused by rising energy prices and the likelihood of a further Chinese crackdown on the private sector.
Treasury yields were stable.
In Japan, Hong Kong, and China, stocks fell.
A report suggesting that Beijing is broadening its surveillance of the private sector by looking into links to state banks dampened sentiment.
With the risk of a delayed recovery from the pandemic loomed over markets, US futures fell after falls in the S&P 500 and Nasdaq 100.
Oil prices remained around $80 per barrel despite a power crisis across Europe and Asia. Thermal coal futures in China hit a new high for the second day in a row. Aluminum supplies are being squeezed as a result of the energy crisis, with prices reaching a 13-year high. Other industrial metals have also risen in value, adding to inflationary pressures.
The 10-year Treasury yield in the US was little changed when the cash market returned after a vacation.
Besides inflation, investors must also contend with a potential drop in federal reserve bond purchases.
The dollar held an advance.
Europe Session (10/11/2021)
The highest oil prices since 2014 sparked fears that a developing energy shortage may derail the global pandemic recovery, sending US futures and European equities down.
As flooding shut down operations, west Texas intermediate crude climbed beyond $80 a barrel, and China's coal futures hit a new high. European shares were slightly weaker, with travel companies leading the way lower. Contracts in the United States also fell, with the tech-heavy Nasdaq 100 trailing the S&P 500.
Fuel shortages in China and Europe support the notion that higher inflation will persist beyond central bankers' estimates, forcing them to raise interest rates more quickly to alleviate pricing pressures. Price pressures are projected to have stayed elevated last month, according to inflation figures due Wednesday.
Tuesday FX Option Expiries
EUR/USD: 1.1615 (EU1.41B), 1.1840 (EU708.6M), 1.2065 (EU580.2M)
USD/JPY: 112.50 ($878M), 112.00 ($712.1M), 111.50 ($706M)
USD/CAD: 1.2780 ($1.49B), 1.2620 ($734M), 1.2505 ($530M)
USD/CNY: 6.7500 ($470M), 6.6000 ($400M), 6.4515 ($400M)
AUD/USD: 0.7300 (AUD446.9M), 0.7330 (AUD420.2M)
GBP/USD: 1.3600 (GBP453.7M)
USD/MXN: 20.75 ($665M), 20.64 ($390M)