After last week’s turbulence, markets are likely to close out the final week of the third quarter with another bout of volatility.
For Wall Street there’s the switch of focus to the debt ceiling debate, with US Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell continually stressing the urgency of the matter – an making several appearances before congress and elsewhere this week to urge resolution.
Also on the radar will be the progress around the Biden Administration’s infrastructure package.
Struggling Chinese property group Evergrande will again be front of mind for many investors, as will China’s surprise crack down on cryptocurrencies.
Evergrande’s woes saw global shares fall sharply early last week but then rebound as fears around the company receded and with the Fed meeting out of the way.
But those fears returned on Friday and the Chinese government also provided yet another shock with the declaration that cryptocurrencies are now illegal in China – completely (see separate story).
Eurozone shares fell 0.9% on Friday but the Dow added 33.18 points, or 0.10%, to 34,798.00; the S&P 500 edged up 0.15% higher to 4,455.48 and the Nasdaq eased 0.03% to 15,047.70.
The Nasdaq underperformed over the week – the tech-heavy index added 0.02% for the week. The Dow finished the week 0.6% higher, while the S&P 500 ended it 0.5% higher.
Reflecting the soft US lead, ASX futures only rose 2 points, or 0.03%, pointing to a pretty flat start to trade for the Australian share market on Monday.
The ASX 200 lost 0.4% on Friday to be down 27.6 points to 7,342.6.
While the S&P 500 rose half a per cent last week and Eurozone shares rose 0.4%, Japanese shares however lost 0.8% and Chinese shares dipped 0.1%.
Australian shares also fell 0.8% despite a mid-week rally as the weak iron price weighed on miners which along with falls in financial and property shares more than offset big gains in energy (those three-year highs for oil and gas prices) and utility stocks (after the two bids for AusNet).
Bond yields rose again on the back hawkishness from the Bank of England, a rate hike from Norway’s central bank and Fed signals for a faster reduction in bond buying.
The yield on US 10-year bonds leapt to 1.45%, about where they were in July and before those concerns set in about the strength of the recovery and growing Covid Delta cases.
Oil prices and most metal prices rose, and the iron ore price had a bounce – up more than 11% for 62% Fe Fines shipping to northern China.
Gold sold off heavily after the Fed meeting and got no boost from the woes at Evergrande.
The $A was little changed as was the $US.
“I think this market turmoil has yet to conclude,” CFRA chief investment strategist Sam Stovall said. “Certainly September is doing what it normally does. It frustrates investors.”
The three major stock indexes are also higher for the third quarter. The key S&P 500 is up 1.5%.
Strategists say how the market trades in the coming week may be the most important development, after the wild swings in stocks and also the rapid rise in Treasury yields late in the week.
The 10-year rate had shot up to 1.46% by Friday after trading at about 1.31% on Wednesday.
