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Below is the daily global market update 04 October 2021 By Team Kristal.AI

“Risk sentiment struggles for direction

Friday was a positive session for equities with the SPX trading back above the 4350 level. This wasn't enough to help it close in the green for the week though, joining other major indices in closing lower (-2.2% in this case). Among sectors, the standout performer was Energy (+5.75%) with all other sectors in the red. Crude and Natural Gas have been elevated through the month as both shortages in supply, and rising demand persist. Speculation of a colder than expected winter is keeping Natural Gas futures on an exponential path higher for now. We have the OPEC+ monthly meeting today, where they will likely stick to their planned supply increases and try not to flood the markets. More Wall Street banks join the chorus of projecting Crude at 100 in the coming months - WTI is around the 75 lvl for now.

S&P Financials were the closest to positive territory among the other sectors, as their outlook improved with rising rates (higher net interest income). US yields were the driving force last week as markets looked to price in a more hawkish stance portrayed by central banks across the world the week before. The US dollar continued to remain strong and HY spreads widened from record lows as Evergrande has brought concerns of leverage in the system back to the forefront. The US Congress had an eventful week too - with the debt ceiling issue postponed for a month or so, the Dems had a weekend of infighting over the course of passage of two bills. While there is no timeline on these for now, Biden's USD 3.5tn budget package will almost certainly be reduced, maybe even by half. More details are likely in the coming week.

China will be off for their Golden Week, with markets opening up again only on Friday. Evergrande has another USD 260 mn maturity on Monday that it has guaranteed. A delay in payment of only 5 days is possible here and if the holders of the bond (Jumbo Fortune issued) force a default, that would cascade across all their other liabilities too. On the geopolitical side, Friday and Saturday saw repeated incursions by China into Taiwanese airspace (38 and 39 respectively). We have rate decisions from Central banks in Australia, NZ and India this week. The main event will be US NFP on Friday with the expectation of 470k jobs added in Sep and the unemployment rate ticking down to 5.1%.”

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