Market Quick Take - August 16, 2021 Market Quick Take - August 16, 2021 Market Quick Take - August 16, 2021

Market Quick Take - August 16, 2021

Macro 6 minutes to read
Saxo Strategy Team

Summary:  US equities surged on Friday to post a strong close to the week, with the S&P 500 posting a strong new all-time high, while the Nasdaq 100 index has yet to break free of the recent range. US treasury yields dropped ahead of this week, in part after a huge miss on the initial US University of Michigan sentiment reading for August, as the delta variant outbreak may be weighing on confidence. Gold surged as the dollar dropped with crude oil trading lower on the current virus threat to demand.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - interesting to note that the S&P 500 index  surged late last week and posted a strong new all-time high on Friday, while the Nasdaq 100 index moved in directional sympathy late last week without managing to take out the cycle highs above, in part on a couple of laggard mega caps of late, particularly the gut-punch to Amazon after its most recent earnings report. It is remarkable to see how the US market continues to shrug off worsening delta-variant concerns.

USDJPY– is trading in obvious sympathy with US treasury yields, which posted a huge reversal back lower in the wake of US CPI data last Thursday and the shocking initial August University of MIchigan sentiment reading on Friday (more on that below). The price action in USDJPY tumbled from the high of 110.80 early in the week to a close on Friday of 109.55, with the price action nudging a bit lower still to start the week in Asia. The next key chart area is the sub-109.00 levels posted just ahead of the strong US July payrolls jump the week prior, although the pair has yet to post a close below 109.00 since May.

EURUSD – the supermajor tested the 1.1706 low of 2021 last week before surging on Friday, in part on the steep drop in US treasury yields and on weak US consumer sentiment data. The rally is not yet large enough to label a bullish reversal, but will begin to look like one if more of the price action from the recent 1.1900 area is erased, for example, on a rally and close above 1.1850. Meanwhile, the focus has been on that 2021 low, a sell-off below which could trigger a further slide to 1.1600, if not 1.1500.

Gold finished last week on a firmer footing after a much weaker than expected University of Michigan sentiment (see below) helped deflate some of the buildup taper angst with Treasury yields and the dollar traded lower ahead of the weekend. Both paused their retreat overnight with gold and silver drifting lower as a result. A major band of resistance has emerged between $1790 and $1815 while support needs to hold around the $1750 area. Following last Monday’s flash crash, speculators slashed their gold and silver net longs by more than 50% leaving the market exposed to fresh buying on a break higher. This week the market will be watching a speech by Fed chair Powell, as well as minutes of the Fed’s last meeting.

Crude oil (OILUKOCT21 & OILUSSEP21) trade lower for a third day with Brent back below $70 after key oil consumer China released weaker than expected retail sales and industrial production data and following Friday’s very weak sentiment reading. These developments support IEA’s latest downgrade to demand for the months ahead as a resurgent delta coronavirus variant is impacting demand across the world. Also, in the US there are signs shale producers are ramping up activities with the number after the number of rigs last week rose by 10 to 397, marking the biggest jump since April.

What is going on?

US University of Michigan sentiment reading plunges to lowest since 2011 - the initial reading for August on Friday was a shocking 70.2 versus 81.2 expected and 81.2 in July, and may be down to the spread of the delta variant or in part to the humiliation of the US presence in Afghanistan. The expectations component dropped a whopping 13.8 points to 65.2, worse than the readings posted in the heart of the initial pandemic outbreak last year.

Global congestion increases. According to the latest data released by Kuehne+Nagel, one of the world's leading logistics companies, more than 392 vessels of the major carriers are anchored off ports, as many ports on every continent are facing disruption in their operations. Global congestion is likely to severely increase in the short term following the shutdown of a container terminal in China’s Ningbo where Covid-19 cases were detected last week. This will continue to push upward transportation costs at the global level.

BHP Group in talks to divest oil business amid climate concerns. The increased focus on climate change and the recent IPCC report are making it tough for companies to be engaged in intensive carbon businesses. BHP Group, one of the world’s largest mining groups, is in talks with Woodside Petroleum to take over its energy assets spanning Australia and Gulf of Mexico. The miner had said it will focus on materials used for renewable energy and electrification.

Economic growth in China continues to slow, with the July Industrial production figure released overnight showing only 6.4% year-on-year growth versus 7.9% expected, while Retail Sales only advanced 8.5% year-on year vs. 10.9% expected. Like nearly every other country, China is dealing with the delta variant of Covid, leading to targeted lockdowns and disruption of travel as well as cancellation of some events involving mass gatherings.

The weekly Commitments of Traders report covering the week to August 10 saw money managers cut bullish bets in energy and industrial metals due to growth worries related to the current virus surge. Investment metals suffered with gold and silver seeing their net length more than halved in response to last week’s flash crash, while adverse weather across the world gave a further boost to both grains and soft commodities. Overall, the total net long across 24 major commodity futures was cut by 4% to 2.2 million lots with selling of crude oil, gas oil, gold, silver, and copper being only partly offset by demand for sugar, soybeans, corn, and wheat.

What are we watching next?

Fate of US stimulus packages. The US Senate has passed a $1 trillion stimulus package with heavy bipartisan support as seen in the 69-30 vote, although only a bit over half of that package would involve new spending, with the remainder funded by unused Covid stimulus. The scale of the package is modest in terms of the immediate impact if it is able to proceed through the House and become law, given that it will be spread over five years. The bigger question looming is whether President Biden’s more comprehensive $3.5 trillion stimulus “budget resolution” sees the light of day, as it will have to rely entirely on Democratic votes. The Senate on Friday passed a vote on the framework of the budget resolution on purely partisan lines, a first step in a long process for whether the huge expansion of social spending measures in the stimulus is able to survive the  difficult process of becoming law.

RBNZ meeting on 18 August – Expect the Reserve Bank of New Zealand to hike rates by 25bp this week and later this year. This move has been fully priced in by the market. The economy is back to normal and the recent release of the 2Q unemployment data (with unemployment dropping to its pre-Covid level at 4.0%) were the last evidence needed to start the hiking cycle.

Snap election in Canada set for September 20 - Prime Minister Justin Trudeau has called an election, hoping to capitalize on strong polls and achieve an outright majority in parliament that would give his party a mandate to set the agenda and policy focus for another four years.

‘Earnings to watch today. Today’s earnings focus is on Meituan, one of China’s largest e-commerce companies, which is down for the year due the ongoing technology crackdown by the government. The recent outlook from Baidu suggests a softer economy, so Meituan might disappoint as well on the outlook.

  • Monday: Meituan, China Construction Bank, Agricultural Bank of China, China Life Insurance, Postal Savings Bank of China, Bank of Communications, Tencent Music
  • Tuesday: BHP Group, Just Eat Takeaway, Adyen, Alcon, Walmart, Home Depot, Sea Ltd, Agilent Technologies, AIA Group, Fortum
  • Wednesday: NVIDIA, Cisco, Lowe’s, Target, TJX Cos, Analog Devices, Synopsys, Tencent, Geely Automobile, CSL, Coloplast, Carlsberg
  • Thursday: Geberit, Estee Lauder, Applied Materials, Ross Stores, Bilibili, CNOOC
  • Friday: Deere

Economic calendar highlights for today (times GMT)

1230 – US Aug. Empire Manufacturing

1230 - Canada Jun. Manufacturing Sales

1300 – Canada Jul. Existing Home Sales

0130 – Australia RBA Minutes


Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 07

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
  • The rise of populism: Far-right parties will influence the future

    The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.

    Read article
  • Investing in China: Navigating Q1 amid economic challenges

    Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.

    Read article

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.