Pfizer Close to Long-Term Buying Opportunity

Pfizer Inc. (PFE) and BioNTech SE (BNTX) released positive data on their COVID-19 vaccine for ages 5 to 11 on Monday but the stock is losing ground with the broad market, adding to a five-week slide that’s already relinquished more than 16%.  The decline is roughly tracking the slow rollover of U.S. Delta infections and another slowdown in daily vaccinations. Last week’s FDA advisory meeting didn’t help, with the group declining to recommend broad-based booster shots.

Pulling Back from August Breakout

The pharmaceutical giant has gained 17% so far in 2021 despite the latest downturn, with a good portion of selling pressure generated by a rotation out of pandemic plays. However, the last six months have proved how difficult it will be to transition from pandemic to endemic, especially with billions around the world still unvaccinated. Taken together with Pfizer’s bullish breakout pattern, the current decline should offer a low risk buying opportunity.

Approval for ages 5 to 11 will open eligibility to more than 50 million new vaccinations in the EU and USA. As the business partners noted on Monday, “Pfizer and BioNTech plan to share these data with the FDA, European Medicines Agency (EMA) and other regulators as soon as possible. For the United States, the companies expect to include the data in a near-term submission for Emergency Use Authorization (EUA) as they continue to accumulate the safety and efficacy data required to file for full FDA approval in this age group.”

Wall Street and Technical Outlook

Wall Street consensus is surprisingly lukewarm, with a ‘Hold’ rating based upon 4 ‘Buy’, 15 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $39 to a Street-high $61 while the stock is set to open Monday’s session on top of the median $44 target. While this placement indicates that Pfizer is fairly-valued, it’s also likely that analysts are underestimating the vaccine’s long-term revenue potential.

Pfizer topped out at 44.05 in 2018 and sold off to a six-year low during 2020’s pandemic decline. A volatile recovery finally reached the prior peak in August 2021, setting off an immediate breakout that posted an all-time high at 51.86 less than three weeks later. The pullback into September is now approaching a zone of strong support near 40, raising odds for a buy-the-dip wave that confirms the breakout and sets the stage for strong 2022 upside.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Commodity Supercycle Sets New Record Highs – Where Next For Prices?

Commodities are currently on an unstoppable run with everything from the metals, energies to agriculture markets setting new record highs as the supercycle firmly gathers pace.

Last week, a wide number of commodities blasted through all-time highs.

Aluminium prices soared to 13-year highs. Nickel prices hit 7-year highs and Uranium prices surged to 9-year highs – surpassing a record 6-year high, set only a week ago.

The bullish momentum also split over into other commodities with Natural Gas rallying to a 7-year high. Sugar prices hitting 4-year highs and Lithium prices climbing to an all-time record high.

In total 27 Commodities ranging from the metals, energies to soft commodities have tallied up double to triple digit gains within the in the past year.

Uranium, Natural Gas and Lithium prices are up 219%, 240% and 215%, respectively.

But the best performing commodity, so far this year, is Crude Oil.

Crude Oil prices have quadrupled this year and are setting new record highs almost every month. Crude Oil prices are currently up over 287% from their 2020 lows.

There are plenty of reasons why commodities are on the move, but the key driver is rapidly surging global inflation, tightening supply, logistical bottlenecks and booming demand across many highly essential commodities as a result of the COVID-19 pandemic.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Did The Global Markets Rollover In April/May 2021? What Next? Part I

This research article is designed to answer a few questions related to the current market contraction and the news related to the potential US Fed tightening of monetary policy while it appears China may be experiencing a credit/debt crisis in the early stages. Many traders/investors are contacting us asking our opinions of the current market situation and what we expect in the near future. This article should help answer a lot of your questions and help you to understand what may come next.

Broad Market Cycles Transitioned Near The End Of 2019 – Were You Paying Attention?

First, let’s discuss the broader market cycles that have changed over the past 24+ months. My research team published these articles suggesting the US and Global markets had recently transitioned away from an Appreciation price cycle and into a new Depreciation price cycle. This is very important to understand because the new Depreciation price cycle will likely change how investors perceive opportunities and how currencies fluctuate in an attempt to revalue after an extensive Appreciation price phase. The US Federal Reserve and global central banks have pushed the reflation trade (pre and post-COVID) well beyond a traditional Supply/Demand Equilibrium.

Most importantly, this research article highlights the transition into the new Depreciation Price Cycle and the fact that it should last until 2029 to 2031…

  • November 27, 2020: HOW TO SPOT THE END OF AN EXCESS PHASE – PART II
  • May 20, 2021: BITCOIN COMPLETES PHASE #3 OF EXCESS PHASE TOP PATTERN – WHAT NEXT?
  • May 23, 2021: US DOLLAR BREAKS BELOW 90 – CONTINUE TO CONFIRM DEPRECIATION CYCLE PHASE

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/Article.jpg

What is important to understand about this transition between cycle phases is that it is usually associated with an “Excess Phase Price Event”. This is most commonly seen as a euphoric price rally phase, or a bubble rally phase, that drives incredible price advances in various asset types. We’ve seen these excess phase rallies in Cryptos, various stock symbols, Lumber, Copper, and other commodity prices recently. Currently, Natural Gas, Uranium, and a host of others are experiencing these types of Excess Phase “Blow-Off” peaks.

The transition into a new Depreciation Price Cycle will likely prompt the US Dollar to weaken below $87~88 eventually, prompting a very strong rally in Precious Metals. But before that happens, the “Blow-Off” peaks must complete and burst. We need to see some type of anti-climax event that changes trader/investor sentiment and restores more normal price relationships to assets. We may be experiencing that right now – the end of the “Blow-Off” euphoric price cycle phase as the next few charts will attempt to illustrate.

NYSE New Highs Collapse As US/Global Markets Rollover

This Weekly chart of the NYSE New Highs clearly illustrates the incredible rally after the March/April 2020 COVID collapse and the extreme new highs that were generated after the November 2020 US elections. In an incredible display of exuberance and euphoria, the NYSE New Highs level reached a massive 531 level on May 10, 2021. Since that time, the NYSE New Highs level has continued to consolidate below the 200 level and has recently moved below 100 as global equities continue to show weakness across the board.

I believe part of this cycle is related to the transition to the new Depreciation Price Cycle and another part of this is related to the Excess Phase “Blow-Off” peaking we’ve seen in price trends recently. Fundamentally, the markets must ramp up in activity and leverage for these excess phase processes to take place, and they must scale back and deleverage as these processes unwind. I still believe the US Federal Reserve will support the US markets and credit cycles throughout this transition, but as traders and investors move towards scaling back and unwinding leveraged trading positions near these peaks, we may see some aspects of overvalued market assets continue to contract over time.

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S&P 500 Stocks Above 150 DMA Is About To Break Below 50 – Possibly Moving

Into Bearish Trending

This Weekly chart of the S&P 500 stocks above the 150 DMA shows quite a bit of history (originating near the start of 2018). Over this time frame, we can highlight two extended downtrends in price: the first happened in August/September 2018, and the second was the COVID-19 virus event. Every major downward price cycle over the past 3 to 4+ years has seen a decline below the 50 levels as the impulse downside price trend. Then, if the trends continue lower, we usually see a move below 20~30 and many weeks of extended downward trending before support is found by the markets.

Since COVID, the US Federal Reserve, and the US Government have enacted a number of support measures to take the pressures off consumers, banks, and many retailers and corporations.

Now that these support systems are ending and the US/Global economy must transition back to more normal aspects of economic function, we may see a moderate sideways/downward price contraction in the US/Global markets if this level breaks below 40~50. Remember, we are not suggesting an all-out bearish market collapse at this phase of the market trend, but we are suggesting that traders/investors need to be aware that this current trend is not the “endless bull market trend” many are used to seeing since the COVID lows (March 2020). That trend ended in April/May 2021 and it looks like we may be in for a bit of a wild ride over the next 12+ months.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/article-2-1024x753.png

Still, at this point, we don’t have any real technical confirmation that the US market trends have broken into any new Bearish price trends. The transition from the Appreciation cycle to the new Depreciation cycle does not guarantee or suggest the US stock market will enter a big bearish price trend. What it does suggest is that volatility will increase while the US Dollar trends below $87 to $88 (eventually) and that Precious Metals will start to move dramatically higher. We are at the early stages of what appears to be the end of the “Blow-Off” rally phase that is complicated by the end of COVID policy, changes in US Fed plans, resumption of more normal economic functions, and an excessive credit/debt rally phase which is contracting.

All of this suggests the markets are about to become very volatile and big trends are going to roil through the global markets as a revaluation process takes place. This will present incredible opportunities for traders and investors who are capable of profiting from these huge trends and price rotations. It could also be very dangerous for those who continue to chase the rally trends with extended leverage.

In Part II of this research article, I’ll explore even more data and charts that support my conclusions and better illustrate what we should expect from the markets over the next 12 to 24+ months.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

As something entirely new, check out my initiative URLYstart to learn more about the youth entrepreneurship program I am developing. This is an online program of gamified entrepreneurship designed to introduce and inspire youth to start their own businesses. Click-by-click, each student will be guided from their initial idea, through the startup process all the way to their first sale and beyond. Along the way, our students will learn life lessons such as communication, perseverance, goal setting, teamwork, and more. My team and I are passionate about this project and want to reach as many people as possible!

For a look at all of today’s economic events, check out our economic calendar.

Have a great day!

Chris Vermeulen
Chief Market Strategist

 

UK Shares Rise on Travel, Banking Boost; Retail Sales Data Ease Taper Fears

The blue-chip FTSE 100 index rose 0.3%, with banking shares gaining after a series of brokerage upgrades and price target hikes.

Asia-focused banks HSBC Holdings and Standard Chartered jumped 1.8% and 0.5%, respectively, after Barclays raised price targets on the stocks. RBC also upgraded HSBC to “outperform” from “sector perform”.

However, gains on the FTSE 100 were capped by miners Rio Tinto and Anglo American, which slipped 2.7% and 3.6% after Morgan Stanley cut its price targets on the stocks.

The domestically focused mid-cap FTSE 250 index advanced 0.5%.

British retail sales dropped 0.9% on the month in August versus a Reuters poll for a rise of 0.5%, after data earlier this week pointed towards a sharp recovery in the jobs market and a spike in inflation.

Investor focus will now be on the outcome of Bank of England’s (BoE) policy meeting next week.

“Next week’s policy decision should reaffirm that some tightening will be needed over the next few years to keep inflation (and the economy) in check. But we don’t expect the BoE to conclude that there is a sufficient case yet for near-term rate hikes,” Deutsche Bank economist Sanjay Raja said.

Airlines Wizz Air, Ryanair Holdings and British Airways owner IAG, and holiday company TUI AG rose between 1.2% and 4.7%, as Britain was set to consider easing its COVID-19 rules for international travel.

“The hope will be that a shift in the rules is the precursor to people jetting off for autumn and winter getaways,” said Russ Mould, investment director at AJ Bell.

Wickes Group jumped 5.6% to the top of FTSE 250 index after Deutsche upgraded the DIY retailer to “buy” from “hold”.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Devik Jain in Bengaluru; Editing by Uttaresh.V and Shounak Dasgupta)

Marketmind: When the Dragon Sneezes, Europe Catches a Cold

A look at the day ahead from Danilo Masoni.

The STOXX 600 index has fallen 1% so far in September, twice as much world stocks, and while Europe broadly is still in favour with investors and research analysts, the index has slipped all the way down to July lows.

Wall Street’s strength overnight could trigger a relief bounce this morning, but the China woes are far from over.

The worsening crisis at China’s No. 2 property developer Evergrande has sent its shares to decade lows, pushed Asian stock markets to their fourth day of losses. Trading in Evergrande bonds has been suspended. And virus outbreaks are clouding travel plans during next week’s Mid-Autumn Festival.

Europe Inc faces internal woes too. Soaring power prices have prompted Spain to cap energy bills and Italy said on Thursday it plans “short-term measures” to offset the price rises. Worries are other governments could resort to similar measures — at the expense of utility firms.

There’s some market support from signs U.S. inflation has peaked and the world’s biggest economy is in robust shape. Retail sales will be eyed later on for more clues on the health of the world’s largest economy.

Key developments that should provide more direction to markets on Thursday:

Japan’s hot exports growth cools as COVID-19 hits supply chains

Philip Morris seals deal to buy UK’s Vectura with 75% stake tendered; French utility Veolia launches 2.5 bln euro capital increase[nL1N2QI0D1; Vivendi paves way for Lagardere takeover

German car registrations Aug

ECB Speakers: Christine Lagarde

Norges Bank Governor Oystein Olsen speaks

Egypt central bank meeting

U.S. weekly jobless claims/Philly Fed September

U.S. Retail sales/business inventories

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Danilo Masoni; editing by Sujata Rao)

 

Record 60 Cargo Ships Wait to Unload at Busiest U.S. Port Complex

With the pandemic still raging around the world, U.S. consumers have not fully resumed previous spending on restaurants and travel, yet they continue to splurge on goods ranging from appliances and home exercise equipment to sweatpants and toys.

Volume at the Port of Los Angeles – the busiest U.S. gateway for trade with Asia – is up 30.3% so far this calendar year.

The global supply chain has been reeling due to overwhelming demand for cargo;, temporary COVID-19 closures of ports and factories in Asia; shortages of shipping containers and key products like resin and computer chips; and severe weather. Transportation costs have spiked, exacerbating delays and fueling product shortages.

“Disruptions continue at every node in the supply chain,” said Gene Seroka, executive director at the Port of Los Angeles.

Containers are waiting on Port of Los Angeles docks a peak of six days for truck pickup, Seroka said. Containers on chassis are waiting 8.5 days “on the street” for warehouse space or to be returned empty to the port. There are nearly 8,000 containers ready to be whisked away by train, with the wait clocking in at 11.7 days, Seroka said.

Ports around the United States are opening gates on weekends to give truckers more time to pick up goods – and companies like Walmart Inc are investing millions of dollars to beef up their near-port operations.

August cargo volumes at the Port of Los Angeles nearly matched the year-earlier surge, when businesses raced to restock pandemic-depleted supplies and retailers rushed in holiday goods.

Total volume at the Port of Los Angeles reached 954,377 20-foot equivalent units (TEU) in August, down 0.8% from a year earlier, port authorities said. Loaded imports were down 5.9%, at 485,672 TEU.

The port sent 367,413 TEU of empty containers to factories in China and elsewhere – a 17% rise from last year. That far outstripped loaded exports which fell 22.9% to 101,292 TEU.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio)

Biden Enlists Disney, Microsoft CEOs In Push For Vaccine Mandates

Participants in the meeting included the chief executives of Walt Disney Co, Microsoft Corp and Walgreens Boots Alliance Inc .

Biden last week announced vaccine mandates for nearly all federal employees, federal contractors, and larger companies as the number of U.S. infections continued to rise, hospital beds in some parts of the country filled up and mask requirements returned. After months of trying to persuade Americans to get free vaccinations, the White House is pushing state and local governments, companies and schools to adopt mandates requiring them instead.

Biden said at the beginning of the meeting that it would take some time to get the new requirements in place.

“It’s about beating this virus and saving lives,” he said.

Some Republican-led states and a sizable minority of Americans have defied vaccine recommendations from health officials, citing economic or freedom-of-choice arguments. With just 63% of the population having received at least one dose, the U.S. vaccination rate now lags  developed economies.

Opinion polls have shown a majority of Americans support some form of vaccine mandate.

Biden told reporters on Tuesday that he had seen “positive support for mandates, by and large,” although he conceded that there would always be a small percentage of people who would refuse to get inoculated.

The White House hopes Wednesday’s meeting will serve “as a rallying cry for more businesses across the country to step up and institute similar measures,” an official said, speaking on condition of anonymity.

The meeting involves business leaders and chief executives who have instituted vaccine requirements or are working to implement the new rules, the person said.

The policies announced last week require nearly all federal workers and federal contractors to get COVID-19 vaccinations and push large employers to have workers inoculated or tested weekly. The new measures would apply to businesses with more than 100 employees, about two-thirds of all U.S. workers.

Also among those meeting with Biden were the CEOs of the Kaiser Permanente healthcare system, the Children’s Hospital of Philadelphia and Molly Moon’s Homemade Ice Cream.

Josh Bolten, president of the Business Roundtable representing employers of 20 million workers, also attended. The Business Roundtable has welcomed Biden’s announcement on mandates. Bolten was a chief of staff to Republican former President George W. Bush.

The fast-spreading Delta variant of the coronavirus has sparked a new wave of sickness and death, posing increased risk not just to the country but to a president who as a candidate promised to get control of the pandemic.

Some small employers have voiced frustration with the mandate. Large employers like U.S. automakers General Motors Co and Ford Motor Co and rare-earths producer MP Materials Corp said they are encouraging employees to get the vaccine, but they were quiet about Biden’s executive order.

Raytheon Technologies Corp, a weapons maker and aerospace company that does extensive business with the U.S. government, said on Wednesday that it expects Biden’s vaccine mandate will strengthen their business outlook heading into the fourth quarter.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Trevor Hunnicutt, Doina Chiacu and Jeff Mason; Editing by Nick Zieminski and Jonathan Oatis)

U.S. Stocks Close Lower on Worries Over Recovery, Corporate Tax Hikes

Optimism faded throughout the session, reversing an initial rally following the Labor Department’s consumer price index report. All three major U.S. stock indexes ended in negative territory in a reminder that September is a historically rough month for stocks.

So far this month the S&P 500 is down nearly 1.8% even as the benchmark index has gained over 18% since the beginning of the year.

“There is a possibility that the market is simply ready to go through an overdue correction,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “From a seasonality perspective, September tends to be the window dressing period for fund managers.”

The advent of the highly contagious Delta COVID variant has driven an increase in bearish sentiment regarding the recovery from the global health crisis, and many now expect a substantial correction in stock markets by the end of the year.

“We’re still in a corrective mode that people have been calling for months,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Economic data points have been missing estimates, and that has coincided with the rise in the Delta variant.”

The CPI report delivered a lower-than-consensus August reading, a deceleration that supports Federal Reserve Chairman Jerome Powell’s assertion that spiking inflation is transitory and calms market fears that the central bank will begin tightening monetary policy sooner than expected.

U.S. Treasury yields dropped on the data, which pressured financial stocks, and investor favor pivoted back to growth at the expense of value. [US/]

The long expected corporate tax hikes, to 26.5% from 21% if Democrats prevail, are coming nearer to fruition with U.S. President Joe Biden’s $3.5 trillion budget package inching closer to passage.

The Dow Jones Industrial Average fell 292.06 points, or 0.84%, to 34,577.57; the S&P 500 lost 25.68 points, or 0.57%, at 4,443.05; and the Nasdaq Composite dropped 67.82 points, or 0.45%, to 15,037.76.

All 11 major sectors in the S&P 500 ended the session red, with energy and financials suffering the largest percentage drops.

Apple Inc unveiled its iPhone 13 and added new features to its iPad and Apple Watch gadgets in its biggest product launch event of the year as the company faces increased scrutiny in the courts over its business practices. Its shares closed down 1.0% and were the heaviest drag on the S&P 500 and the Nasdaq.

Intuit Inc gained 1.9% following the TurboTax maker’s announcement that it would acquire digital marketing company Mailchimp for $12 billion.

CureVac slid 8.0% after the German biotechnology company canceled manufacturing deals for its experimental COVID-19 vaccine.

Declining issues outnumbered advancing ones on the NYSE by a 2.25-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and two new lows; the Nasdaq Composite recorded 50 new highs and 107 new lows.

Volume on U.S. exchanges was 10.07 billion shares, compared with the 9.38 billion average over the last 20 trading days.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephen Culp; additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)

 

After Moderate Selling US Stock Markets Rebound Higher – How Long Will This Trend Continue?

But our interpretation of this rotation was consistent with moderate price rotation that we’ve seen nearly every 20 to 30 days, on average, for almost the past year or longer.  The markets need to really break away from this upward price trend in order to initiate some new correction or downward price phase.  Otherwise, we continue to see moderate price rotation in an upward sloping market.

The economic data and investor expectations may change at some point in the future, but we have not seen the S&P500, NASDAQ or Dow Jones break away from any major trending recently.  One could argue that the Dow Jones, the big Blue Chip Index, and the Russell 2000, the Mid Cap Index, have actually broken away from upward trending.  But one could also argue that investor capital has shifted over the past 6+ months away from Blue Chips and Mid Cap, and more towards Technology, Healthcare, Biotech, Home Builders, and Real Estate.  This shift in how capital is being deployed may account for the somewhat sideways price trend in the Dow Jones and Russell 2000 recently.

S&P Riding The 50 DMA Higher

This Daily ES, S&P 500 E-Mini Futures chart, highlights the continued upward price trend and the continued rebounding off the 20 & 50 DMA Averages over the past 8+ months.  I’ve drawn MAGENTA arcs below each time the S&P has pulled back to the 50 DMA and initiated a strong rebound/recovery attempt.

Until this cycle of moderate rotation, then a strong rebound in price trending is broken and we see some decidedly downward price trending, traders should expect more of this type of pattern in the future.  Of course, the US Federal Reserve’s continued support and buying of assets assist in supporting this type of trending higher.  Traders look at these pullbacks as very strong buying opportunities for instant profits in many cases. Let’s take a look at some current price charts to see how this trend is setting up right now.

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The NASDAQ Shows More Bullish Bias Than The S&P 500

The NASDAQ has been ripping higher over the past 6+ months.  This is mostly because of how the US economy has transitioned into a remote/work-from-home economy and how technology services, Healthcare, Biotech, Real Estate, and Home Building sectors have been performing over the past 6+ months.  The NASDAQ is uniquely positioned to take advantage of the current shift in how the economy is performing and where consumers/traders are taking advantage of trends.

We are seeing the NASDAQ trending within a very defined and tightening price channel, highlighted by the CYAN trend lines.  Recently, near the end of August and into early September, we saw the NASDAQ rally above the upper CYAN trend line and recently fall back into the trend line range.  As the NASDAQ nears the apex level of this very broad Pennant/Flag formation, traders should expect increased volatility in price and the potential for some very big price swings in the near future.

The current bottom in price is setting up near the 20 DMA Average, which has happened many times over the past 6+ months.  It would take a much deeper price pullback to reach the 50 DMA average (the LIGHT GREEN line).  We don’t believe that is likely as we move into Q3:2021 earnings over the next few weeks and into the Christmas Rally phase of the markets.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/Chart_21-09-14_NQ_D.png

Changing Markets Push Global Investors Into US Assets

Certainly, we will agree the markets have extended to what some consider extreme highs and are showing signs of extreme overbought conditions.  But, we also have to consider how the markets have changed over the past 24 months.  COVID pushed the markets away from a more traditional Brick-n-Mortar type of economy and shoved us into a new type of economic process.  Where services, technology, essential supplies/components, and rampant inflation are changing how consumers spend their time/money.

The US stock market, and the continued strength of the US Dollar, has continued to attract capital from all corners of the world. The US stock market is more than 8x more capitalized than any other foreign market exchange.  Take a look at this graphic from Statista.com highlighting the incredible amount of capital deployed in the US stock market compared to other foreign markets.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/2021-07-16_Statista_WorldMarketCap.jpg

(Source: https://www.statista.com/statistics/710680/global-stock-markets-by-country/)

It seems the world is running on US Fuel related to the strength of the US economy and the support of the US Federal Reserve.  While the US Dollar continues to stay above $88~$89, it is very likely that the upward trending in the US stock market will continue.  Traders/Investors simply can’t move away from the US market and miss the opportunities it creates.

Get ready for more trending as we shift into Q4:2021 and the start of the 2021 Christmas Rally Phase in the US Stock markets.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

As something entirely new, check out my initiative URLYstart to learn more about the youth entrepreneurship program I am developing. This is an online program of gamified entrepreneurship designed to introduce and inspire youth to start their own businesses. Click-by-click, each student will be guided from their initial idea, through the startup process all the way to their first sale and beyond. Along the way, our students will learn life lessons such as communication, perseverance, goal setting, teamwork, and more. My team and I are passionate about this project and want to reach as many people as possible!

For a look at all of today’s economic events, check out our economic calendar.

Have a great day!

Chris Vermeulen
Chief Market Strategist

 

Eurozone Impact on Gold: The ECB and the Phantom Taper

Tapering has begun. For now, in the Eurozone. This is at least what headlines suggest, as last week, the Governing Council of the European Central Bank held its monetary policy meeting. The European central bankers decided to slow down the pace of their asset purchases:

Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters.

The financial markets were only slightly moved by the ECB’s action. The price of gold also barely changed, as the chart below shows. One reason is that such a step was widely expected. Another one is that this “tapering” is actually “pseudo-tapering”, or not tapering at all. Why?

The answer is: the ECB will continue to conduct net asset purchases under the Pandemic Emergency Purchase Programme with an unchanged total envelope of €1,850 billion. So, the total number of assets bought under this program won’t necessarily change, as the ECB could still spend all of the envelope. Only the pace will slow down, but please remember that it was boosted earlier this year. Hence, even Christine Lagarde admitted during her press conference that the ECB’s move was rather a “re-calibration of PEPP for next three months” than tapering.

What’s more, the net purchases under the Asset Purchase Programme, the original quantitative easing program, will continue at an unchanged pace of €20 billion per month. Last but not least, the ECB left its interest rates unchanged. And it reiterated that it was not going to normalize interest rates anytime soon, even in the face of strong price pressure. In other words, the ECB signaled once again that it would tolerate higher inflation:

In support of its symmetric two percent inflation target and in line with its monetary policy strategy, the Governing Council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching two percent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realized progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilizing at two percent over the medium term. This may also imply a transitory period in which inflation is moderately above target.

Implications for Gold

What does the ECB’s last meeting imply for gold? Well, although Lagarde and her colleagues didn’t signal any further reduction of monetary accommodation, the slowdown in asset purchases under PEPP is a small step toward normalizing the monetary policy after the pandemic. Additionally, please note that the ECB’s September economic projections boosted both the expected pace of the GDP growth and inflation in the coming years, which should provide the bank more room for hawkish actions. In this context, the ECB could be seen as a shy harbinger of the withdrawal of emergency measures introduced during the epidemic. This is probably why the euro has strengthened slightly after the ECB meeting.

However, the ECB remained very dovish in fact. It will just reduce the pace of asset purchases under PEPP, which was boosted earlier this year. And the European central bankers didn’t provide any timeline, nor any clues about the possible end of its quantitative easing programs. The Fed will also likely maintain its very accommodative stance, especially given the spread of the Delta variant of the coronavirus and the disappointing August nonfarm payrolls.

Having said that, the recent comments from the Fed officials suggest that they are determined to start or at least announce tapering by the end of the year. For instance, St. Louis Fed President James Bullard said in an interview that “The big picture is that the taper will get going this year and will end sometime by the first half of next year”.

Hence, the big picture for gold remains rather negative, as the prospects of the Fed’s tightening cycle could still exert downward pressure on gold. However, the actual beginning of the process, especially if accompanied by more dovish signals from the Fed than expected, could provide some relief for the yellow metal, in line with “sell the rumor, buy the fact”. My intuition is that 2022 may actually be better for gold than this year, but a lot will depend on the future economic developments, as well as the US central banks’ actions and communication. This week we will get fresh CPI data, and the FOMC will gather next week. Stay tuned!

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For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care

 

Luxury, Mining Stocks Weigh on Europe Ahead of U.S. Inflation Data

The pan-European STOXX 600 index was down 0.2% after a partial recovery on Monday from last week’s slump.

Luxury stocks including LVMH, Kering and Richemont fell between 1.6% and 2.0%, tracking their Asian peers lower on concerns about the spread of COVID-19 cases in China.

Jewellery maker Pandora rose 3.7% after it said it aims to achieve sales growth between 6.0% and 8.0% over the coming years.

Mining stocks dragged UK’s commodity-heavy FTSE 100 0.3% lower, even as data showed British employers added a record 241,000 staff to their payrolls last month.

Danish brewer Carlsberg fell 2.6% after a double downgrade to “sell” by Berenberg.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)

Vaccine Maker Valneva’s Shares Slump After UK Ends COVID-19 Deal

The company’s COVID-19 vaccine candidate VLA 2001 relies on inactivated virus, similar to flu vaccines, and is seen by some as having the potential to win over people who are wary of some current vaccines using new mRNA technology.

The British government “has alleged that the company is in breach of its obligations under the supply agreement, but the company strenuously denies this,” Valneva said in a statement, without giving further details.

“Valneva has worked tirelessly, and to its best efforts, on the collaboration … including investing significant resources and effort,” it added.

The British government had no immediate comment.

Despite Monday’s steep fall, Valneva’s shares are still up by around 50% since the start of 2021.

The company said it was still continuing its development plan for VLA 2001.

“Valneva believes that initial approval for VLA2001 could be granted in late 2021”, the company added.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sudip Kar-Gupta and Benoit Van Overstraeten; Editing by Ana Nicolaci da Costa and Mark Potter)

Strained Supply Chains Keep U.S. Producer Prices Hot

Strong demand and supply constraints were underscored by other data on Friday showing the pace of inventory accumulation at wholesalers slowed in July. It is now taking wholesalers the fewest months in seven years to clear shelves.

“Supply chain bottlenecks have persisted longer and more intensely than most predicted at the beginning of this year, and widespread labor shortages are among the main input issues producers are dealing with,” said Will Compernolle, a senior economist at FHN Financial in New York. “This means consumer price inflation should remain elevated for a while.”

The producer price index for final demand rose 0.7% last month after two straight monthly increases of 1.0%, the Labor Department said. The gain was led by a 0.7% advance in services following a 1.1% jump in July.

A 1.5% increase in trade services, which measure changes in margins received by wholesalers and retailers, accounted for two-thirds of the broad rise in services. Goods prices jumped 1.0% after climbing 0.6% in July, with food rebounding 2.9%.

Transportation and warehousing prices shot up 2.8%.

The latest global wave of COVID-19 infections, driven by the Delta variant of the coronavirus, has disrupted production at factories in Southeast Asia, key raw materials suppliers for manufactures in the United States. Congestion at Chinese ports is also adding to the pressure on U.S. supply chains.

In the 12 months through August, the PPI accelerated 8.3%, the biggest year-on-year advance since November 2010 when the series was revamped, after surging 7.8% in July.

Economists polled by Reuters had forecast the PPI gaining 0.6% on a monthly basis and rising 8.2% year-on-year.

Stocks on Wall Street were lower. The dollar was steady against a basket of currencies. U.S. Treasury prices fell.

LOGISTICS DELAYS

Though surveys from the Institute for Supply Management this month showed measures of prices paid by manufacturers and services industries fell significantly in August, they remained elevated. Factories and services providers still struggled to secure labor and raw materials, and faced logistics delays.

This was corroborated by the Federal Reserve’s Beige Book report on Wednesday compiled from information collected on or before Aug. 30 showing “contacts reported generally higher input prices but, as with labor, they were mostly concerned about getting the supplies they needed versus the price.”

The supply bottlenecks are making it harder for businesses to restock after running down inventories in the first half of the year. In a separate report on Friday, the Commerce Department said wholesale inventories rose 0.6% in July after surging 1.2% in June. Sales increased 2.0%. At July’s sales pace it would take wholesalers 1.20 months to clear shelves, the fewest since July 2014, from 1.22 in June.

“Producers are struggling to replenish their stockpiles against surging demand,” said Matt Colyar, an economist at Moody’s Analytics in West Chester, Pennsylvania.

With inventories tight, producers are easily passing on the higher costs to consumers. Federal Reserve Chair Jerome Powell has steadfastly maintained that high inflation is transitory.

Though most economists share this view, some argue that strong wage growth from a tightening labor market suggests inflation could be more persistent.

“Today’s data on wholesale prices should be eye-opening for the Fed, as inflation pressures still don’t appear to be easing and will likely continue to be felt by the consumer in the coming months,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

The Fed’s preferred inflation measure for its flexible 2% target, the core personal consumption expenditures price index, increased 3.6% in the 12 months through July after a similar gain in June. Data next week will likely show the consumer price index rising 0.4% in August and increasing 5.3% on a year-on-year basis, according to a Reuters survey.

High inflation and supply constraints, which tanked motor vehicle sales in August, have prompted economists to slash their third-quarter gross domestic product growth estimates to as low as a 3.5% annualized rate from as high as 8.25%. The economy grew at a 6.6% rate in the second quarter.

“The danger with inflation is once prices go up, they don’t go back down and the economy and producers and consumers all have to live in a costlier world where many don’t have the means to do more than just barely survive,” said Chris Rupkey, chief economist at FWDBONDS in New York.

There are, however, signs that inflation is likely nearing its peak. Excluding the volatile food, energy and trade services components, producer prices rose 0.3%, the smallest gain since last November. The so-called core PPI shot up 0.9% in July.

In the 12 months through August, the core PPI accelerated 6.3%. That was the largest rise since the government introduced the series in August 2014 and followed a 6.1% increase in July.

Details of the PPI components, which feed into the core PCE price index, were mixed. Healthcare costs fell 0.2%. Portfolio management fees rose 1.1% and airline tickets increased 8.9% after soaring 9.1% in July.

“Soft medical services suggest that evidence of persistently stronger inflation in PCE may be more limited,” said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Dollar Gains With Yields as Fed Policy in Focus

The greenback has risen from a one-month low reached last Friday after jobs data for August showed that jobs growth slowed, while wage inflation rose more than expected.

It has not yet been able to establish a strong trend, however, as investors wait on new clues on when the Fed is likely to begin paring its bond purchases and, eventually, raise rates.

“That to me is the most important thing, is when does the Fed hike rates, and unfortunately we may not know that for a little while,” said Erik Nelson, a macro strategist at Wells Fargo in New York.

Cleveland Fed President Loretta Mester said on Friday that she would still like the central bank to begin tapering asset purchases this year, joining the chorus of policymakers making it clear that their plans to begin scaling back support were not derailed by weaker jobs growth in August.

Fed officials are grappling with rising price pressures while jobs growth remains below their targets.

Data on Friday showed that U.S. producer prices increased solidly in August, indicating that high inflation is likely to persist for a while, with supply chains remaining tight as the COVID-19 pandemic drags on.

The Wall Street Journal on Friday wrote that Fed officials will seek to make an agreement at the Fed’s September meeting to begin paring bond purchases in November.

The dollar index gained 0.05% to 92.57. It is up from a one-month low of 91.94 on Friday.

The U.S. currency had dipped earlier on Friday on improving risk sentiment on news that U.S. President Joe Biden and Chinese leader Xi Jinping spoke for the first time in seven months.

In a statement, the White House said Biden and Xi had “a broad, strategic discussion,” including areas where interests and values converge and diverge. The conversation focused on economic issues, climate change and COIVD-19, a senior U.S. official told reporters.

The dollar was last down 0.13% to 6.4419 yuan, nearing a more than two-month low of 6.4233 yuan reached last week.

The euro fell 0.07% to $1.1816 on Friday, a day after the European Central Bank said it will trim emergency bond purchases over the coming quarter.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Ritvik Carvalho in London; Editing by Chizu Nomiyama)

Stagflation: A Stagnation Breaker?

One of the greatest risks cited currently by the markets is stagflation. The term means a situation in which there is high inflation and stagnation at the same time. So far, we have only had high inflation (CPI annual rate has soared 5.4%, and almost 5% if we take the quarterly average), but some analysts believe that inflation has already peaked. However, the economic growth is fast (the GDP surged 12% in Q2 2021 year-over-year), as the chart below shows. So, why bother?

Well, although a recession is rather not lurking around the corner, slowing economic momentum quite clearly is. The GDP growth for the second quarter (although impressive) came below expectations, the consumer confidence declined, and, more generally, the index of US data surprises has recently turned negative.

Among negative surprises, we should point out the decline in retail sales by 1.1% in July, which was worse than expected (0.3%) and the drop in the New York Fed’s Empire Manufacturing Index from 43.0 in July to 18.3 in August, much below the expected 29.0. So, the recent decline in the bond yields may not be as nonsensical as it may seem.

I warned my readers a long time ago that the recovery from the pandemic would be spectacular but short-lived and caused mainly by the low last year’s base. If you lock the economy, it plunges; when you open it, it soars, simple as that. Now the harsh reality steps in, and it’s yet to be seen how the US economy will perform in a post-pandemic reality with the spreading Delta variant of the coronavirus, a slowdown in China’s economy, and without government stimulus.

When it comes to the price front, it’s also highly uncertain. Inflation has softened a bit in July, but it remains high, and I’m afraid that it could prove to be more persistent than it’s believed by the Fed and some analysts. The latest Empire Index, mentioned above, tells us: although the index of manufacturing activity fell more than expected, the inflationary pressure strengthened. As the report says, “input prices continued to rise sharply, and the pace of selling price increases set another record”.

What’s disturbing in all this – and this is why inflation may stay with us for longer – is that the Fed is downplaying the inflation risk. And even the monetary policy 101 says that the best way of preventing inflation is acting early as inflation pressure builds up. Friedrich Hayek, a great economist and a Nobel Laureate, once compared taming inflation to catching a tiger by the tail – it’s not an easy task when the cat has already escaped the cage. The problem is that when central bankers wait to see the whites of inflationary tiger’s eyes before acting, it’s already too late. If you stare at the tiger in the eyeballs, you are probably to be eaten soon – unless you hike interest rates abruptly, choking economic growth off.

Going into specifics, the Fed’s view that inflation is transitory mainly rests on the belief that price increases are caused by supply disruptions related to the epidemic. However, inflation is not limited to just a few feverish components — it’s broad-based. In particular, the cost for shelter, the largest component of the CPI, has also been gradually rising, even though the owner’s equivalent rent component doesn’t reflect properly the recent record surge in U.S. home prices (see the chart below). If this is not inflation, I don’t know what is!

The increase in house prices is important here, as Gita Gopinath, Chief Economist and Director of the Research Department, IMF, admitted at the end of July: “More persistent supply disruptions and sharply rising housing prices are some of the factors that could lead to persistently high inflation”.

What does it all mean for the gold market? Well, stagflation should be negative for almost all assets. When we have a stagnant economy coupled with high inflation, stocks and bonds are selling off together. In such an environment gold shines, as it is a safe haven uncorrelated with other assets.

Stagflation is so terrifying because the Fed won’t be able to rescue Wall Street simply by cutting interest rates, as it could only add fuel to the inflation fire. The only viable solution would be to engineer another ‘Volcker moment’ and tighten monetary policy decisively to combat inflation. Given that debts are much higher than in the 1970s and some analysts even point to a debt trap, it could put the economy into a severe economic crisis. So far, investors seem not to worry about high inflation, but just as things go well until they don’t, investors are relaxed until they don’t. For all these reasons, it seems smart to own such portfolio diversifiers as gold.

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Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care.

 

New Biden Plan Could Mandate COVID Shots or Tests for Two-Thirds of U.S. Workers

The new measures, which Biden was due to lay out in remarks at 5 p.m. ET (21:00 GMT), cover about two-thirds of all U.S. employees, part of a broader, more aggressive attempt to get Americans vaccinated amid a surge in COVID-19 cases from the fast-spreading Delta variant.

Under Biden’s plan, the administration would also require vaccinations for more than 17 million healthcare workers at hospitals and other institutions that participate in Medicare and Medicaid social programs for poor, disabled and older Americans, senior administration officials said.

The new vaccination requirements cover about 100 million workers, or about two-thirds of all workers in the United States, officials said. In addition, the administration plans to ramp up testing capacity for the virus.

Biden will use his authority under the Defense Production Act to spur industry to accelerate production of the tests, and big retailers including Walmart, Amazon.com and Kroger will sell the tests at cost for the next three months to make them more affordable, the officials said.

The full recovery of the U.S economy depends on blunting the spread of the virus, which is a key health and political goal of the president, a Democrat who took entered the White House in January.

“Our overarching objective here is to reduce the number of unvaccinated Americans,” White House spokeswoman Jen Psaki said, noting that 80 million still have not been vaccinated. “We want to reduce that number, decrease hospitalizations and deaths and allow our children to go to school safely.”

Federal workers unions suggested on Thursday they would accept the vaccine mandate.

Federal workers will have a 75-day “ramp up” period to get vaccinated, and then be referred to human resources for counseling and possible disciplinary action, Psaki said. Workers who are not exempt from vaccination and refuse to get a vaccine may be terminated.

53% VACCINATED

Despite a full-throttled campaign by the Biden administration urging all eligible Americans to get the free vaccines, just over 53% of Americans are fully vaccinated, according to date from the U.S. Centers for Disease Control and Prevention (CDC).

The disease has killed more than 654,000 people in the United States, and deaths and hospitalizations have been rising sharply as the easily transmissible Delta variant of the virus spreads.

In July, Biden said federal workers had to get vaccinated or face regular COVID-19 testing and other restrictions like mandatory face covering at workplaces.

Biden’s speech also will cover mask-wearing, protecting the economic recovery from the pandemic-induced recession, and improving healthcare for people infected with COVID-19, Psaki said.

“He’s going to speak directly to vaccinated people and their frustration, and he wants them to hear how we’re going to build on what we’ve done to date to get the virus under control and to return to some version of normal in this country,” she said.

The White House COVID recovery plans, and the projected U.S. economic rebound were based on the vast majority of eligible Americans being vaccinated this year. But the public health issue has become politicized, with a vocal minority refusing the shots and mask mandates, arguing that they are an infringement on their individual rights.

COUNTRY ‘STILL IN PANDEMIC MODE’

The spread of the Delta variant has raised concerns as children head back to school, while also rattling investors, upending company return-to-office plans, and tamping down hiring.

With 160,000 new infections a day, the country is “still in pandemic mode … That’s not even modestly good control,” Biden’s chief medical adviser, Dr. Anthony Fauci, told Axios.

“You’ve got to get well below 10,000 (a day) before you start feeling comfortable,” Fauci added.

The White House plans to offer booster shots providing additional protection to those who are fully vaccinated. That goes against arguments from the World Health Organization and other advocates that say with global vaccine supplies limited, rich countries should pause booster programs until more people worldwide are inoculated.

But with Delta causing more symptomatic breakthrough infections among fully inoculated individuals, most vaccinated Americans want a booster, a recent Reuters/Ipsos opinion poll found.

Abbott Laboratories and other test manufacturers are trying to boost production as cases soar, after having scaled back in recent months. CVS Health Corp recently imposed limits on the number of at-home tests customers can buy.

The White House said the federal government cannot mandate vaccines nationwide, but it has encouraged school districts, businesses and other entities to require shots.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Jeff Mason, Ahmed Aboulenein, David Shepardson, and Trevor Hunnicutt; Additional reporting by Steve Holland and Susan Heavey; Writing by Steve Holland and Jeff Mason; Editing by Heather Timmons, Bill Berkrot and Howard Goller)

Easing Virus Woes Lift Asia FX View; Baht Bears at 6-Month Low – Reuters Poll

Countries, including Malaysia, Indonesia, and Thailand, have seen a drop in infections, enabling them to relax restrictions, while Singapore last month became the world’s most vaccinated country after it fully inoculated 80% of its population.

The U.S. Federal Reserve holding off on earlier-than-expected tapering of its massive asset purchases kept the dollar in check and further supported sentiment towards emerging currencies.

Investors placed long bets on the Chinese yuan for the first time since mid-July, and cut short bets on South Korea’s won, Malaysia’s ringgit and the Philippine peso, according to the poll of 11 respondents.

They also turned bullish on Singapore’s dollar and Indonesia’s rupiah for the first time since mid-June.

Short positions on the baht unwounded to their lowest since Feb. 25 as the tourism-reliant economy relaxed COVID-19 curbs, prompting its leading joint-business group to raise its 2021 economic forecast.

Market view of the region’s worst performing currency this year was also buttressed after Prime Minister Prayuth Chan-ocha survived a no confidence vote in parliament last week.

The baht is not out of woods yet, however, analysts at DBS Bank said while highlighting Thailand’s flip to a current account deficit since last year and potential policy normalisation from the Fed.

“Thailand’s need for external financing is coming at a potentially challenging period. The Thai baht is therefore vulnerable to any surprise in the Fed’s hawkish tilt,” they said.

The baht was seen weakening to 35-36 against the greenback by the first quarter of 2022. The currency traded at around 32.70 against the dollar on Thursday.

Long bets on India’s rupee rose to their highest in more than six months, as investors were convinced that a sustained economic recovery was underway despite warnings of a possible third wave of COVID-19 infections.

“Policy makers are likely to remain wary about potential increases in infections and their impact on economic activity,” Standard Chartered Global Research said in a note this week.

“However, given the recent increase in vaccinations and the reduced sensitivity of economic activity to COVID-19 infections, the impact of any future rise in infections is unlikely to derail the recovery process.”

The Reuters survey is focused on what analysts believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3.

A score of plus 3 indicates the market is significantly long U.S. dollars. The figures included positions held through non-deliverable forwards (NDFs).

The survey findings ASIAPOSN are provided below (positions in U.S. dollar versus each currency):

DATE USD/CNY USD/KRW USD/SGD USD/IDR USD/TWD USD/INR USD/MYR USD/PHP USD/THB

09/09 -0.09 0.33 -0.36 -0.44 -0.69 -0.88 0.23 0.40 0.12

26/08 0.425 0.868 0.474 0.18 0.326 -0.08 1.1922 0.779 1.351

12/08 0.32 0.69 0.77 0.2 -0.09 0.37 1.39 1.17 1.75

29/07 0.27 0.78 0.71 0.27 0.36 0.29 1.4 1.21 1.49

15/07 -0.15 0.27 0.53 0.23 0.13 0.68 1.06 1.06 1.56

01/07 -0.29 -0.29 0.02 0.36 -0.19 0.5 0.49 -0.04 0.85

17/06 -0.63 -0.36 -0.49 -0.5 -0.58 -0.21 -0.05 -0.31 0.2

03/06 -1.34 -0.51 -0.55 -0.4 -0.44 -0.71 0.32 -0.66 0.37

20/05 -0.33 0.43 0.37 -0.06 0.33 -0.03 0.26 -0.22 0.81

06/05 -0.52 -0.39 -0.58 0.31 -0.59 0.86 -0.04 -0.35 0.5

(Reporting by Shashwat Awasthi; editing by Uttaresh.V)

Worries Over Economic Recovery Shake World Stocks, Wall Street

Accommodative central bank policies and optimism about reopening economies have pushed equities to record levels but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.

Markets are also still assessing data from last week which showed the U.S. economy created the fewest jobs in seven months in August, and wondering how the U.S. central bank will respond.

The Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth, St. Louis Federal Reserve Bank President James Bullard said in an interview with the Financial Times on Wednesday.

“Everything is tapering, tapering, tapering. We are looking at every single central bank – when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.

The Dow Jones Industrial Average fell 76.74 points, or 0.22 percent, to 35,023.26, the S&P 500 lost 7.8 points, or 0.17 percent, to 4,512.23 and the Nasdaq Composite dropped 87.96 points, or 0.57 percent, to 15,286.37 by 2:17 p.m. EST (18:17 GMT).

MSCI’s world equity index fell 0.41% by after seven consecutive days of gains.

European stocks fell 1% and hit their lowest in nearly three weeks. Britain’s FTSE 100 struck two-week lows, down 0.75%.

“September is the month investors confront reality,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, pointing to uncertainty over the Fed’s tapering plans and inflation fears as a reason investors are taking profits or reallocating funds.

The coronavirus Delta variant and concerns over the economic recovery were also weighing.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Federal official Robert Kaplan was due to speak later on Wednesday.

In Europe, markets are focused on whether the European Central Bank will this week begin to scale back its bond purchase programme.

The dollar paired some gains after jumping to a one-week high against a basket of other major currencies. It also hit a one-week peak against the the single currency and was trading at $1.1826.

The dollar’s strength offset investors’ risk aversion to pressure bullion to a two-week low. Spot gold prices fell 0.1%.

Longer-dated U.S. government bond yields slipped on Wednesday coming off a two-day climb after labor market data and ahead of an auction by the Treasury in 10-year notes. Yields on 10-year Treasury notes fell to 1.3495%, retreating from this week’s eight-week highs.

Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.32% .

“Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.77%, stemming an eight-session string of gains.

Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.

But Japan’s Nikkei jumped 0.89% and hit a five-month high, helped by revised gross domestic product growth figures beating expectations.

Bitcoin continued its rout, down 1.1%.

Shares of Coinbase Global Inc dropped over 2% after the firm revealed it has received a legal notice from the top U.S. markets regulator.

U.S. crude oil jumped 1.39% to $69.32 a barrel and Brent crude rose 1.4% to $72.69 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Alun John in Hong Kong; Editing by Kenneth Maxwell & Shri Navaratnam, Editing by William Maclean and Nick Tattersall)

World Equities Under Pressure as Economic Worries Mount

Key U.S. equity benchmarks were down and the MSCI world equity index retreated from a record hit overnight, following seven consecutive days of gains to all-time highs. Earlier in the session, hopes of extra stimulus in Japan and strong China trade data had boosted Asia shares.

The Dow Jones Industrial Average fell 209.2 points, or 0.59%, to 35,159.89 and the S&P 500 lost 9.96 points, or 0.22 percent, to 4,525.47 by 2:22 p.m. ET (18:22 GMT). The Nasdaq Composite bucked the trend, adding 0.18% to 15,391.26.

“The combination of exorbitant expectations, nosebleed valuations and slowing macro environment make the go-forward reward/risk outlook less attractive,” said Jeffrey Carbone, managing director at Cornerstone Wealth in Huntersville, North Carolina.

European stocks retraced ahead of an ECB policy meeting on Thursday. The STOXX 600 benchmark fell 0.5% but were not far from last month’s lifetime peak hit.

Data on Friday showed the U.S. economy created 235,000 jobs in August, the fewest in seven months as hiring in the leisure and hospitality sectors stalled, reducing expectations that the Fed will opt for an early tapering of its monthly bond purchases.

The market took the surprisingly soft U.S. payrolls report on Friday “in stride, with the assumption that the COVID-19 Delta variant had an impact on economic activity in August,” Arthur Hogan, chief market strategist at brokerage National Holdings in New York, said in a market note.

Speeches by a number of U.S. policymakers later this week will be closely watched for any indication about how the weak jobs report has impacted the Fed’s plans on tapering its bond purchases and keeping its expansive policy for the near-term.

The recent equity rally started after Fed Chair Jerome Powell’s dovish speech at the Jackson Hole Symposium in August.

“Given that before Jackson Hole many FOMC members had come out in favor of tapering on a tight timetable, we’ll see if they confirm, or align with Powell’s more moderate message,” said Giuseppe Sersale, fund manager at Anthilia.

U.S. government bond yields rose on Tuesday, continuing the climb seen on Friday in the wake of the jobs report and ahead of a fairly busy week of Treasury auctions.

Japanese shares rallied further on hopes the ruling Liberal Democratic Party will offer additional economic stimulus and easily win an upcoming general election after Prime Minister Yoshihide Suga said he would quit.

Tokyo’s Nikkei crossed the 30,000 mark for the first time since April, also helped by an announcement on its reshuffle, and the broader Topix index climbed 1.1% to a 31-year high.

Anthilia’s Sersale said investors had a defensive positioning on Japanese stocks that led to a short squeeze.

“I was positive on Tokyo (stocks) and remain so, but perhaps at this point it is better to look for a less overbought entry point,” he said.

Mainland Chinese shares extended gains, with the Shanghai Composite rising 1.5% to its highest since February, helped by Chinese trade data showing both exports and imports grew much more quickly than expected in August.

“The mood is improving on hopes the government will take measures to support the economy and that the monetary environment will be kept accommodative,” said Wang Shenshen, senior strategist at Mizuho Securities.

A rout in bonds and shares of China Evergrande Group deepened on Tuesday after new credit downgrades on the country’s No. 2 developer.

The euro retreated 0.16% at $1.1849, while Europe’s broad FTSEurofirst 300 index dropped 0.46% to 1,821.56.

The ECB is seen debating a cut in stimulus, with analysts expecting purchases under its Pandemic Emergency Purchase Programme (PEPP) falling, possibly as low as 60 billion euros a month from the current 80 billion euros.

Germany’s 10-year yield hit its highest since mid-July.

The Australian dollar briefly rose after the central bank went ahead with its planned tapering of bond purchases, but quickly gave up those gains after the bank reiterated its need to see sustainably higher inflation to raise interest rates.

The Aussie fell 0.6%, off its 1-1/2-month high set on Friday.

The U.S. dollar rose 0.3% against a basket of other major currencies, pressuring gold prices. Spot bullion prices were down 1.4%. U.S. gold futures settled 1.9% lower at $1,798.5 an ounce.

Elsewhere in commodities, oil prices slid on concerns over weak demand in the United States and Asia. Saudi Arabia’s sharp cuts to crude contract prices for Asia had earlier revived demand concerns.

Brent crude futures fell 1.02% to $71.46 per barrel, while U.S. crude futures declined 1.75% to $68.08.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Chris Prentice in Washington, Danilo Masoni in Milan and Hideyuki Sano in Tokyo; Editing by Jane Merriman, Dan Grebler and Alex Richardson)

Apple to Hold Event on Sept 14, New iPhones Expected

Since 2013, Apple has delivered new iPhones around September like clockwork. The tech giant, which launched a redesigned iPhone with 5G connectivity last year, is not expected to make radical changes this year, with most analysts pointing to small technical updates to the phone’s processor and camera system.

“Upgrades rates peaked in 2021 on 5G, we expect upgrade rates to moderate but still drive high volumes in 2022,” J.P.Morgan analyst Samik Chatterjee wrote in a note, adding that he still expects a record year thanks to higher sales of the lower priced iPhone SE.

The new line of smartphones are expected to expand the Portrait mode feature to video and also have higher-quality video recording format, according to a Bloomberg report.

The Portrait mode uses the phone’s depth sensor to focus on faces while blurring the background, allowing amateur photographers to produce high-quality snaps.

Apple was not immediately able to comment beyond the invitation sent to the media.

The mid-September launch results in a sales surge in the last week of Apple’s fiscal fourth quarter as millions of avid shoppers snap up the newly releases iPhones.

Last year, however, the event got delayed by a month because of the COVID-19 pandemic, meaning opening-weekend iPhone sales were not included in fourth-quarter results.

The event also helps Wall Street analysts model their sales projections for the holiday shopping season in Western markets, typically Apple’s largest sales quarter.

Known for its splashy phone launches packed with hundreds of journalists at its sprawling campus in Cupertino, California, Apple has turned to virtual events since last year because of the pandemic.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Saumyadeb Chakrabarty)