Weekly market update : A calm that hides a nervousness

09/10/2021 | 12:51pm
September 10
Weekly market update
intro Hampered by fears about the U.S. economy and a forthcoming reduction in monetary support from central banks, financial markets had a difficult start to the week. They eventually regained some color after the ECB's reassuring announcements. The weekly balance sheet appears mixed and volatility is gradually returning, a sign of uncertainty among stakeholders.

In the latest weekly sequence, there was a new breakout of the Nikkei, which is up 4.3% (+5.4% the previous week). The Japanese index is returning at high speed to its high points of last March, posting a new annual gain of over 10%. The Hang Seng, meanwhile, continues to lag, with a loss of 1.45% over the last five days. The Hong Kong index has lost more than 5% since January 1. As for the Shanghai composite, it gained 3.43% this week, setting a new annual record in the process.

In Europe, the CAC 40 recorded a weekly performance of 1.16% while the Dax lost 1.37% and the Footsie 1.95%. The SMI was down 2.54%, as was Portugal, which lost 3%. Spain and Italy fared better, with declines of 2% and 1.23% respectively.

At the time of writing, the red dominates in the United States,-0.6% for the Nasdaq-100 over the week, -0.22% for the S&P500 and -1.59% for the Dow Jones.

Shanghai A vs. Hang Seng vs. Nikkei since the beginning of 2021 :


This week's star performer is undoubtedly aluminum. The state cost in Guinea is driving up the price of the non-ferrous metal. The country is a major producer of bauxite, which is an essential ingredient in the manufacture of aluminum. The political event raised concerns about the supply of production lines, and the law of supply and demand did the rest: the price per ton soared over the last five days (+4%) to reach $2774.

As for precious metals, platinum lost 4% over the week. Meanwhile, palladium reached its lowest levels in more than a year, losing 9%. Jolts in the automotive production chain, due to shortages of electronic components, are causing fears that supply will exceed demand in the short term.

And finally, oil is rebounding at the end of the week after a drop caused by the announcement that China was drawing on its strategic reserves of black gold to supply the market. Over the last five sessions, the London barrel is down 2%, WTI is down 2.5%. Gold continues to stagnate at around $1800 per ounce. The barbarian relic ends the weekly sequence in negative territory (-1.8%).

Gold, palladium and platinum prices over a sliding month :

Equity markets

The yoga-focused apparel maker is up 8.3% for the week. In five years, the stock has jumped by more than 560%. Lululemon Athletica has posted quarters after quarters of better-than-expected results and the latest quarter did not disappoint, which led the company to increase its annual guidance. The brand is benefitting from the rising popularity of yoga and well-being.

It also managed to combine combine yoga with comfort and luxury, while building a loyal community.

In the second quarter, the American group made a net profit of $208.1 million, or $1.59 per share. Sales reached $1.45 billion, compared with $902.3 million a year earlier.

For the full year, it expects EPS of between $7.38 and $7.48 per share and revenue of between $6.19 billion and $6.26 billion.

Lululemon is unstopabble


There has been no shortage of macroeconomic events over the past week, but their consequences have generally been quickly erased by a return to a certain wait-and-see attitude. After the turmoil created by disappointing US employment figures in August, investors were waiting for the European Central Bank this week. Christine Lagarde and her team endorsed a lower pace of asset purchases, referring to a "recalibration" rather than a "reduction" of the program. The ceiling for monthly repurchases will be reduced to €65 billion, compared to €80 billion previously. In fact, the ECB had already been buying less securities under the "PEPP" since August, so the decision did not take anyone by surprise. It is important to note that the ECB raised its growth and inflation projections, a sign that the European economy remains strong.

In the foreign exchange market, the dollar regained some ground after the job data. The Dollar Index, which measures the strength of the greenback against a basket of six currencies, is up slightly on the week. It takes USD 1.18249 to 1 EUR and 1.08522 EUR to 1 CHF. Bitcoin had a complicated week, with a drop below USD 46,000, but volatility remains high. On the sovereign debt side, the US 10-year is trading at 1.32%. The Bund yield rose to -0.35%, while the French OAT yield, which had returned to positive territory at the beginning of the week, stood at -0.02% on Friday. Elsewhere in the euro zone, the Italian bond, at 0.69%, is paying less than its Greek counterpart (0.74%).

Next week, investors will look for further indications of the inflation trajectory in the August U.S. consumer price index (Tuesday) and take the pulse of household sentiment with U.S. retail sales (Thursday).
A calm that hides a nervousness

Another week of calm on markets as the world's main indexes stabilize at their current levels. In a visible inflationary context, central bankers are wisely preparing to implement a possible reduction in asset (tapering) and bond buybacks. The post-pandemic era could then pave the way for a rise in interest rates. Everyone is making their own estimates, but the general consensus is for a plan that would start as early as November and end in mid-2022. Next week will be marked by the disclosure of consumer price indexes, particularly on Tuesday for the United States. On Thursday, the Philly Fed index and new jobless claims will be shared.
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