Daily Alert – Tuesday 21st September 2021: Equities tank across the globe

Mark NugentDaily Alert, Sept 2021

Daily Alert – Tuesday 21st September 2021: Equities tank across the globe

Good morning traders.

Yesterday, the markets reacted to the fear of contagion from the developing Evergrande situation in China. Evergrande is a property developer with USD300bln in debt. Everyone is exposed to the company. The Chinese government, as part of their “prosperity for all” policy, see Evergrande as a major risk and are making it more difficult for the company to take on more debt as well as making it more difficult for people to get mortgages. There are fears that Evergrande will fail, causing widespread carnage. Risk sentiment was strongly risk-off with a measure of -90 on my simple scale. It only goes to -100. Equities tanked. US 10-year yield tanked. The JPY and USD rose.

However, the equity dip buyers piled in towards the end of the day and global equities closed with a significant wick to the downside, showing a lot of buying pressure. The JPY, when inspecting the H1 chart, showed the risk-off-inspired rise had stalled.

I went long on the S&P500 at the close. The trade is currently almost 2x risk in the money.

Elsewhere, Trudeau got a third term in Canada and the RBA again said they do not see an interest rate hike before 2024.

There is not much on the calendar for the rest of today. Next up we have the Fed at 7pm BST tomorrow.

I’ll be back in the morning.

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