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Below is the daily global market update 05 October 2021 By Team Kristal.AI

“Tech takes equities lower

SPX closed the day down about 1.3% with the support coming in around the 4280 level for now. With Crude & Natural Gas going from strength to strength (both up 2+%) on the day, the Energy sector was also up 1.6%.  Utilities gained 1.3% in keeping with the defensive mindset and Real Estate was marginally positive. Following the recent run up, XLE has gained 44% on the year, easily outpacing SPY's 14.5% YTD gains.

The US dollar was lower and FX vol was up across the board. US yields are trading softer now with Treasuries bid and the 10Y falling below 1.5% again. Gold was marginally up once again as the commodities picture overall stays constructive for now. Crypto looked good too with Bitcoin back to below 50k and Ethereum at the 3.4k level.

The big news on Evergrande yesterday was that another Chinese developer, Hopson Development Holdings, planned to acquire a 51% stake in the company. The shares of both names were suspended on HKEX and the degree of state involvement is not known here. The biggest uncertainty remains the true depth of Evergrande's off balance sheet liabilities and some estimates put its offshore USD borrowings at only 6% of the total number. The stress in China's real estate sector continues to persist as another leveraged developer, Fantasia, announced it will not be repaying a USD 205 mn bond maturing today.

Ahead today, we have a rate decision from the RBA (hold likely on rates and stimulus) and we get Services PMI numbers across the globe for October. If they are able to match the strong manufacturing PMI numbers from Friday, that ought to help inject some optimism to counter the prevailing risk off sentiment.”

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