Market Update

Although the week kicked off on a shaky note with US stock markets dipping almost 3% on Monday (20th September 2021), the attached table reveals a positive turnaround with most prominent global stock markets finishing the week on an upward trajectory.
As history has often shown, while global equity markets can navigate through various events, they despise uncertainty. Fortunately, this week brought some clarity.
The early part of the week was overshadowed by concerns surrounding Evergrande, particularly the potential ripple effects on financial markets if this debt-laden Chinese real estate giant were to crumble.
A significant factor contributing to the week's market recovery was the clear guidance from the Fed regarding the pace and timeline for tapering its QE initiatives.
Though the situation continues to evolve, indications suggest that Chinese regulators are inclined to contain any potential fallout.
Fed Chair, Jay Powell, announced that tapering is set to commence in November and wrap up by the middle of the following year. This timeline is quicker than our initial projections, but the Fed's inflation estimates remained largely consistent, pegged at 2.2% for 2022 (a marginal increase from the earlier 2.1% forecast).
Across the Atlantic in the UK, the BoE, as anticipated, maintained interest rates at 0.1%. Interestingly, two out of the nine policymakers advocated for a decrease in QE. However, this stance is somewhat moot given that the BoE’s QE is poised to conclude by December naturally.
Moreover, the BoE conceded that UK inflation might surpass its prior 4% prediction due to the recent surge in energy costs. Even though this trajectory will elevate inflation significantly above the BoE's 2% target, we're confident that the decision-makers will interpret this as an anomaly. Raising interest rates might adversely impact households, and by extension, the wider economy, considering consumer expenditure constitutes roughly two-thirds of the UK's economic activity.
Peering into next week, we're set to observe US durable goods orders, US ISM, Eurozone's CPI, Chinese PMI, Japanese retail stats, and industrial output from Japan.