Despite a Fed that left monetary policy unchanged, cooling sooner-than-anticipated tapering expectations, global market sentiment ended on a downbeat this past week. On Wall Street[1], the Dow Jones, S&P 500[2] and Nasdaq[3] Composite closed -0.36%, -0.37% and -1.11% respectively. European equities were mixed. The Dax 30[4] closed -0.8% as the FTSE 100[5] netted little changed.
It was much worse in the Asia-Pacific region. A crackdown by Beijing on technology and education companies sent regional shares tumbling. The CSI 300 and Hang Send Index closed -5.46% and -4.98% respectively. Rising Covid cases, amid the emerging more contagious Delta variant, are posing a risk to global growth.
Still, the haven-linked US Dollar[6] ended lower, likely hindered by the ongoing decline in Treasury yields after the Fed as second-quarter US GDP data missed expectations. This dynamic particularly benefitted the Swiss Franc[7] and Japanese Yen[8]. Meanwhile, China’s push to curb steel output[9] to ebb pollution sent iron ore futures to a 3-month low. The Australian Dollar[10] broadly underperformed.
There are a handful of key economic events to keep an eye out for in the week ahead. The Australian Dollar and British Pound[11] will be eyeing the RBA and BoE respectively. Both central banks may brush aside recent inflationary pressures as temporary. The RBA could downgrade the economic outlook amid ongoing lockdowns in parts of the country.
Towards the end of the week, the United States and Canada will report jobs data for the Greenback and Loonie[12] respectively. Economists now seem to be overestimating the health and vigor of the US economy, opening the door to disappointing data relative
