Investment

Global Markets Overview: Is The US Dollar Becoming Unstoppable?

BY Standard Investment Bank · September 12, 2023 06:09 am

KEY POINTS

Stocks of the Week are Manchester United and Novo Nordisk. Manchester United scored more than 15% in the red on reports that the Glazer family were no longer selling the club.

Yields:

Treasury Yields closed the week higher as recent comments from Fed officials have indicated that the central bank is content to keep rates steady at their next policy meeting on Sept. 19 to 20, though remain steadfast on the fight against inflation.

The closely watched spread between yields of two- and ten-year U.S. treasuries widened during the week, closing the week at minus 73.075 basis points, from minus 70.388 bps the week before. Yields on German Treasuries also remained high on increased expectations of enduring high-interest rates.

The spread between the yields of the German two-year Schatz and ten-year Bund widened to minus 47.567 bps from minus 44.644 bps the week before.

Equities:

Equities traded flat-to-heavy during the week as investors traded cautiously ahead of upcoming U.S. inflation readings, in which they will be looking for clues on the Fed’s future policy decisions on interest rates.

The technology-heavy Nasdaq index shed 0.15% during the week, the S&P 500 dropped 0.23%, the German Dax 40 closed the week 0.63% lower, the Swiss SMI dropped 1.22%, the French CAC 40 retreated 0.77%, the Australian ASX 200 shed 2.07%, the Hang Seng index closed 3.10% lower.

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Stocks of the Week are Manchester United and Novo Nordisk. Manchester United scored more than 15% in the red on reports that the Glazer family were no longer selling the club.

Denmark’s Novo Nordisk briefly overtook French luxury goods behemoth LVMH to become Europe’s most valuable company as investors bet on the potential of its weight loss drugs.

Novo Nordisk produces blockbuster weight loss drugs Ozempic and Wegovy, which have generated massive hype over the past year.

Currencies:

The U.S. dollar traded strongly during the week on the back of updates showing the U.S.’s economic resilience relative to global economies, strengthening the case for another Fed rate hike ahead.

The USD was also supported by a stronger-than-expected U.S. Services PMI read the strong U.S. weekly jobless claims update. Europe’s common currency was a net winner against all its peers but the Canadian Dollar and the USD, boosted by the risk-averse environment.

The Sterling Pound lost against all its peers apart from the Australian Dollar and the Japanese Yen – likely due to a disappointing U.K. Services PMI and BOE Governor Bailey’s comments that further rate hikes may no longer be needed.

The Australian Dollar lost against all its peers, weighed by the RBA interest rate hold and weaker than expected Chinese PMI.

The Canadian Dollar gained against its peers on the back of rising oil prices and the latest Bank of Canada monetary policy statement where they made it clear that they are prepared to raise interest rates if necessary.

Commodities:

The non-yielding gold dropped more than 1% on a strong U.S. Dollar and sifting risk sentiment. Oil prices rose after Saudi Arabia and Russia extended their 1.3 million barrels per day production cut, trading to its highest levels since November 2022.

Wheat and Corn traded sideways as Russia stated openness to discussions on the grain deal. Sugar added 1.94% but was contained within the April 2023 high. Orange juice continued its bullish run, adding 4.50% to come closer to its August all-time highs.