September’s Gainers & Losers:
Major US Equity Benchmarks:
- Dow Jones Industrial Average -4.29%
- S&P 500 -4.76%
- Nasdaq 100 – -5.73%
- EUR/USD -1.97%
- AUD/USD -1.19%
- USD/JPY +1.15%
- GBP/USD -2.03%
US Treasury Yields:
- US 10-Year Note +13.49%
- US 30-Year Bond +5.79%
- XAU/USD -3.13%
- XAG/USD -7.26%
- WTI +9.51%
US equity markets tumbled in September; the S&P 500 printed its worst monthly underperformance since the beginning of the COVID-19 pandemic in March 2020 which wreaked havoc across financial markets.
Since early 2021, investors remained upbeat, despite the emergence of the Delta variant and inflation concerns. Risk aversion, however, swept across equities last month amidst the seemingly never-ending Evergrande insolvency saga in China, in addition to the US Federal Reserve’s plans to begin slowing asset purchases.
Heading into the fourth quarter, technicians will note September established a bearish engulfing candle on the S&P 500 monthly chart, movement snapping a seven-month bullish phase. The relative strength index (RSI) also displays overbought conditions, potentially setting the technical stage for additional losses in October.
US Dollar Index:
The greenback—measured by the US dollar index—rallied 1.7 percent in September, elevated on rising US Treasury yields and the prospect that the US Federal Reserve is preparing to taper asset purchases—in place to combat the COVID-19 pandemic.
Yet, despite clocking one-year peaks at 94.50, the daily timeframe shows price action bonded with resistance, in the shape of a 38.2% Fibonacci retracement at 94.45 and a 1.272% Fibonacci projection at 94.40. October 1st witnessed reasonably robust selling from the aforementioned resistances, which could land the index at support from 93.90, a previous Quasimodo resistance. Additional losses may have the index shake hands with support around 93.44 during October.
Economic Events to Watch in October:
Tuesday 5th October: Reserve Bank of Australia Rate Decision
Friday 8th October: United States Employment Situation Release
Wednesday 13th October: US Inflation m/m (CPI)
Friday 15th October: United States Retail Sales m/m
Wednesday 20th October: UK Inflation y/y (CPI)
Friday 22nd October: German Flash Manufacturing and Services PMIs