US Indices
|
Name of the index |
Friday’s close |
Weekly Change |
Weekly Change (%) |
|
Dow Jones Industrial (US 30) |
36,100.31 |
-331.91 | -0.91% |
|
S&P 500 (US 500) |
4,682.85 |
-18.85 | -0.40% |
|
Nasdaq (US Tech 100) |
16,199.88 |
-136.15 | -0.83% |
Source: Bloomberg
It was a volatile week for U.S. stocks. Following last week’s record highs across the three largest indices in the U.S, all the major indices closed lower on Friday, 12 Nov 2021. The Dow Jones Industrial Average dropped 0.6%, while the S&P 500 dipped 0.3%. Additionally, the Nasdaq Composite fell by around 0.7%.
Over the past week, Tesla CEO Elon Musk sold around $6.9 billion worth of his company’s stock, which affected the tech-heavy Nasdaq Composite. Tesla’s share price plummeted 15.4% for the week, marking the company’s worst weekly performance in 20 months. The U.S. markets moved down as inflationary pressures appear to be persisting longer and more severely than the Federal Reserve initially anticipated. October’s CPI data revealed that inflation is at its hottest levels in over three decades, reporting a price jump of 6.2% from the previous year (YoY). But, stock market investors aren’t sweating just yet. Despite a turbulent end to the week, all three major indices are not sitting far from their record highs, suggesting that U.S. equities have managed to shrug off rising inflationary pressures for now. This resistance is most likely down to the fact that rising prices have not coincided with rising real yields of Treasury bonds or a downturn in corporate earnings.
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Forex
 |
 |
Source: Bloomberg
Due to the response to high US inflation data and weak UK GDP data (6.6% actually vs 23.6% earlier), the GBP/USD currency pair has been on a downward trend, leading to doubts about whether the Bank of England will hike interest rates in December. On the other hand, EUR/USD was also affected (EUR/USD down by around 1%), mainly due to the US inflation reports and the European Central Bank maintaining its conservatism on the interest rates, citing inflation as ‘transitory’. AUD/USD ended the week around the 0.73 mark, losing its gains over the month. This loss was due to the weak Unemployment Rate (5.2% actual vs 4.8% forecast) and the US dollar shooting up after the CPI hit its high (6.2% YoY).
The week’s economic calendar includes:
- GDP (Q3) and CPI (October) for the EU
- RBA Meeting Minutes for the AUD
- Retail Sales and Initial Jobless Claims for the USD
- CPI and Retail Sales for the GBP
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Commodities
Source: Bloomberg
Gold climbed up by more than 2% since last week, mainly because of inflation concerns. Last week’s CPI (0.9% actual and 0.6% forecast) and Core CPI (0.6% actual and 0.4% forecast) reports were higher than expected, causing speculation that the Federal Reserve would raise interest rates sooner than anticipated, boosting Treasury yields. Although gold and Treasury Yields have an inverse correlation, gold has managed to keep up the momentum (since gold is considered an inflation hedge).
Silver improved last week, aided by inflation data, which was backed up by the Consumer Sentiment Report (66.8 actual versus 72.5 forecast) citing uncertainty about inflation.
Since last week, there has been a decline in oil prices due to expectations of the Fed interest rate increase to combat inflation and reports that President Biden will release oil from the Strategic Petroleum Reserve to tame down the price.
Among the economic events scheduled for this week are:
- Retail Sales (1.2% forecast vs 0.7% previous)
- Crude Oil Inventories and Initial Jobless Claims (260k forecast vs 267k previous)
If the Retail Sales data is weaker than expected, it may be because of inflation fears, and this negative impact would boost metals in general and vice versa.
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Cryptocurrency
Source: Bloomberg
In the crypto market, prices ended the week mostly lower as bullish investors failed to maintain prices near last week’s record highs for Bitcoin ($68,900 level) and Ether ($4800 level). On Thursday, 11 Nov 2021, BTC/USD dropped 0.12%, then declined 1% for the week.
The price of Bitcoin reached an early intraday high of $65,421 on Friday, 12 Nov 2021, before switching its direction. After falling short of its first major resistance level of $65,528, BTC moved lower to a late intraday low of $62,225 and later crashed through its first and second major support levels, at $64,066 and $63,342, respectively. After finding late support, it rose through the major support levels to end the day at around the $64,100 levels.
Ether recorded an all-time high of $4,851 on Wednesday, 10 Nov 2021, surpassing the $4,800 level for the first time. The price dropped slightly towards the end of the week, hovering around the $4,600 mark early Friday morning, 12 Nov 2021.
Additional gains are expected among the cryptocurrency giants, as the Bitcoin network is set to receive its most significant upgrade since 2017. The software upgrade called Taproot will enhance transaction privacy and efficiency. More importantly, it will unlock the potential for smart contracts – a crucial feature of its underlying blockchain technology.
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