Delta variant and supply chain concerns spark “risk off” moves

Intermediate

Macroeconomic/ geopolitical developments

  • The ongoing global spread of the COVID-19 Delta variant and the concerns regarding the new Mu variant, have impacted on growth expectations.
  • In addition, ongoing supply chain worries have continued to fuel inflation fears and accentuate growth concerns.
supply chains
  • These factors leave global financial markets vulnerable to erratic, “risk off” moves.
risk off
  • On Thursday the European Central Bank (ECB) trimmed pandemic bond purchases, though this had limited market impact.
  • In the UK, the government secured tax increases of £12 billion for social care and the National Health Service.

Global financial market developments

  • Global shares indices saw setbacks from new recovery/ record peaks, with European averages leading averages lower.
S&P 500 chart
  • The US Dollar gained in the “risk off” environment, with EURUSD dipping.
  • GBPUSD posted losses and gains but remains vulnerable.
  • Gold fell with the stronger US Dollar, questioning the recent solid recovery.
  • Oil sustained positivity from its recent strong advance.
  • Copper extended its rebound bias.

Key this week

  • Geopolitics:
    • Still monitoring the impact of the global spread of the COVID-19 Delta variant and watching for developments with the Mu variant.
    • Checking for possible new national lockdown restrictions or for further global lockdown easings.
  • Central Bank Watch:  No significant Central Bank activity.
  • Macroeconomic data: Data standouts this week are the US, UK, Canadian and EU CPI data, UK and Australian Employment reports and China, US and UK Retail Sales.
DateKey Macroeconomic Events
13/09/21Nothing of note
14/09/21UK Employment report; US CPI
15/09/21China Industrial Production and Retail Sales; UK CPI; Canada CPI
16/09/21Australian Employment report; US Retail Sales
17/09/21UK Retail Sales; EU CPI

Editor in chief

Steve Miley is the Market Chartist and has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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