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Relief at Fed, Evergrande, IPOs Galore - What's Moving Markets

EconomySep 23, 2021 06:39AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Global markets extend their gains on relief at the lack of immediate tightening by the Federal Reserve and a stay of execution for China Evergrande. Norway becomes the first major advanced economy central bank to hike rates post-pandemic, and Brazil hikes by a full percentage point, but the Bank of England and others are expected to stand pat. Weekly jobless claims are due. Robinhood (NASDAQ:HOOD) gets a piece of the week's IPO action and Citigroup (NYSE:C) issues a dire warning on natural gas prices. Here's what you need to know in financial markets on Thursday, 23rd September. 

1. Global markets extend Fed/Evergrande relief rally

Global markets continued their rise as China’s central bank again injected a large amount of liquidity into the financial system while authorities worked on a short-term fix to stop real estate developer Evergrande officially defaulting.

Newswires reported that the authorities had instructed Evergrande to avoid defaulting on a payment of $83 million in interest on a dollar bond due Thursday. However, it wasn’t clear how Evergrande would get its hands on the money needed.

Other real estate stocks in China rallied amid a backdrop of reports suggesting that Evergrande will be split up in such a manner as to avoid defaulting on individuals and suppliers, something seen as key to preserving confidence in the market, albeit that doesn't resolve longer-term doubts about the sector’s overdue deleveraging.

2. Let it go: Norway, Brazil hike but BoE, CBRT expected to stand pat

Norway’s central bank became the first among major advanced economies to raise interest rates since the pandemic. Norges Bank hiked its key rate to 0.25% from 0%, signalled a further hike in December and raised its expectations for the key rate in 2022 to 1.4% from 1.3%.

It’s still the outlier: the Bank of England isn’t expected to change policy when it announces its latest decisions at 7 AM ET (1100 GMT), mindful that the U.K. government is withdrawing significant fiscal support from the economy.  Switzerland also left its key rate unchanged.

Emerging market central banks have also adopted a slightly more dovish stance in recent weeks: Turkey is expected to join Taiwan and the Philippines in keeping rates on hold today. The outlier here is Brazil, which tightened by 100 basis points on Wednesday after the Federal Reserve’s meeting.

3. Stocks set to open higher; jobless claims due

U.S. stock markets are set to open higher again, extending the gains made in the wake of Wednesday’s Fed press conference.

The Fed’s new ‘dot plot’ shows half of the policy-makers on the board now support an interest rate hike next year, a stark contrast from earlier this year when the majority saw no hikes until 2024. Fed Chair Jerome Powell also hinted that the central bank could phase out its bond purchases by the middle of next year. 

The market has thus withstood a significant shift in monetary policy expectations in recent weeks, and is still close to its all-time highs posted earlier in the month. By 6:15 AM ET, Dow Jones futures were up 118 points, or 0.3%, while S&P 500 futures were up 0.4% and Nasdaq 100 futures were up 0.5%.  Results are due early from Accenture (NYSE:ACN) and Darden Restaurants (NYSE:DRI), while Nike (NYSE:NKE), Trip.com and Costco (NASDAQ:COST) report after the bell.

The central bank action in China and the U.S. is likely to take the drama out of weekly jobless claims numbers due at 8:30 AM ET.

4. Robinhood gets a piece of the IPO action

The sense of relief at the Fed’s new guidance and news out of China has provided a positive backdrop for the current spate of IPOs in New York.

Payments software group Toast saw its stock rise 56% on debut Wednesday, while Freshworks, a business software group seen as a rival to Salesforce (NYSE:CRM), rose 36%.

The week will see discount brokerage Robinhood involved in at least three IPOs – Brilliant Earth, a company focusing on ethically-sourced jewellery, medical diagnostics company Cue Health, and U.K.-based Bitcoin miner Argo Blockchain.

5. Citi warns of natural gas apocalypse

Winter is coming to the natural gas market, according to Citigroup analysts at least.

The bank said gas prices could peak at over $100 per million Btu this winter due to seasonally low European inventories, booming Chinese demand and supply constraints from Russia to Nigeria. That’s equivalent to an oil price of $580 a barrel.

The difficulties in raising supply in short order makes the global market vulnerable to price spikes throughout the winter, Citi analysts said. At least in the short term, one of the factors behind this month’s rally has reversed: the wind has started blowing across north-western Europe again, reducing the need for fossil-fueled power in the U.K.

Relief at Fed, Evergrande, IPOs Galore - What's Moving Markets
 

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Comments (9)
Yusuf Abubakar
Yusuf Abubakar Sep 25, 2021 6:28PM ET
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i want to become a good trader
sadik office
sadik office Sep 25, 2021 9:50AM ET
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HDI force
sadik office
sadik office Sep 25, 2021 9:49AM ET
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HDI force
sadik office
sadik office Sep 25, 2021 9:49AM ET
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Ajay Uppal
Ajay Uppal Sep 24, 2021 11:29AM ET
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old payment already defaulted, heading for challenges
dav lo
dav lo Sep 23, 2021 10:02AM ET
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relief tense relief tense
Ryan Messier
Ryan Messier Sep 23, 2021 8:49AM ET
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Won't Evergrande be in same situation when the next payment becomes due?
Mauricio Salinas
Mauricio Salinas Sep 23, 2021 8:06AM ET
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ohh J.P. you received the message they sent you on Monday. This house if cards will eventually crumble, what's a *******show.
Friday Idemudia
Friday Idemudia Sep 23, 2021 6:55AM ET
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Nice
Samkys Samkys
Samkys Samkys Sep 23, 2021 6:55AM ET
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how
 
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