Equities were lower across the board last week. As volatility picked up across Equities and FX and yields fell across almost all government debt. This was indicative of the risk-off sentiment prevailing over the last week. Crude declined almost 9% over the week and the Energy sector was the biggest drag on the S&P 500. Despite the negative press around Afghanistan and doubts about the passage of the bipartisan infrastructure bill in the House, the US equity index has held up well and is still within striking distance of record highs.
EM sentiment wasn't much better either, underperforming developed markets over the week. North Asia was in the red with HK leading the way, down almost 6%. China, Korea & Japan were down about 3.5% on the week. Tencent released positive results to beat estimates. Huarong (China's state-owned bad debt manager) secured a decisive bailout, but China's regulatory reach was the overriding concern here. Other parts of EM were better off but the commodities complex sold off again as prices faltered.Gold was able to stay flat on the week but the precious metals sector was unable to match it - Silver fell 3% and Palladium fell a whopping 14%. Despite some gains on Friday, base metals Copper (-6%) and Iron Ore (-8%) were down last week as well. The US dollar coming out as the strongest currency didn't help their case as well. The US yield curve got flatter ahead of the Jackson Hole Central Banking conference this week (indicating bearish sentiment). No one told Crypto though and Bitcoin gains outpaced that of Ethereum this week as it sits shy of the 50k level.Not a heavy calendar outside of Jackson Hole this week with PMIs kicking us off. The passage of the bipartisan infra bill in the House will be closely watched, should it clear the house, it will provide a boost to the sentiment. The Delta variant's spread across Australia and NZ, along with US daily deaths picking up, remain the main risks to the downside.
August 23, 2021
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