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Archinomics Weekly - Monday 23rd August 2021

one month ago

the
MARKETS

Equities

US equity markets were troubled by hints that the Federal Reserve (Fed) might begin tapering its bond buying programme before the end of the year, although the Nasdaq outperformed. European markets fell sharply on growth recovery fears, prompted by the spread of the Delta variant. Chinese tech stocks were hit hard by further regulatory pressure, as Hong Kong’s HSI index tumbled into bear market territory.

Bonds

Government bond markets showed little reaction to speculation that US tapering could be announced as early as September, enjoying a quietly positive week. Credit spreads over government bonds widened somewhat and healthy demand was seen at these levels. Among high yield bonds, the higher quality BB end of the market outperformed.

Currencies

Safe-haven currencies, namely the US dollar and the Japanese yen, were in demand, while ‘commodity currencies’ like the Australian and Canadian dollars were under pressure. Elsewhere the euro gained ground against sterling.

Commodities

Oil fell sharply, and copper hit a five month low, on mounting concerns over global growth headwinds, while gold enjoyed safe-haven buying interest.

Responsible investing

The UK announced plans to become the world’s leading hydrogen economy, aiming for 25-30% of fuel consumption to be hydrogen-based by 2050.

MACROECONOMIC
UPDATE

FOMC minutes from the Fed’s July meeting indicated ‘most participants’ believed conditions would be met for tapering the bond-buying programme by year end.


Eurozone CPI inflation hit 2.2%, driven by energy and food prices, although core inflation rose by only 0.7%.


China’s tech sector was hit by the approval of a strict data privacy law, while tighter regulation was threatened for the prescription drugs and alcohol sectors.

on the
RADAR

Flash estimates of PMI data from around the globe could indicate a decline in confidence, in the face of the challenges of the Delta variant.


The Jackson Hole Symposium, a gathering of the world’s central bankers, will debate the monetary pathway out of the pandemic.

Listen to our weekly podcast for more information and our experts’ insights.

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