Wall Street ended Friday’s session little changed after a volatile trading week, with the Dow Jones and the S&P 500 extending gains for the third day while the Nasdaq Composite closed virtually unchanged following a move from the PBoC to ban cryptocurrencies and mounting concerns over a potential default from Evergrande. China’s central bank said on its website that all cryptocurrencies are not fiat currencies and cannot be circulated on the market. Meanwhile, the property group failed a payment to its foreign bondholders, leaving investors without any explanation whether the interest payment will be made, raising fears of contagion. On the corporate front, Nike shares fell more than 6% after lowering its sales outlook due to factory closures. For the week, the Dow rose 0.6% and the S&P 500 climbed 0.5% while the Nasdaq gained 0.02%.

WTI crude rose for the fifth consecutive week, with futures up almost 3% to an 8-week high of $73.98 a barrel boosted by growing fuel demand and falling US crude inventories. Disruptions in US Gulf Coast production following Hurricane Ida and other storms have led to sharp draws in US and global inventories. EIA data showed US crude stocks fell by 3.5 million barrels to 414 million last week, the lowest since October 2018. Capping some gains was China’s first public sale of state oil reserves. State-owned PetroChina and private refiner and chemical producer Hengli Petrochemical bought four cargoes totaling about 4.43 million barrels.

The Ifo Business Climate indicator for Germany declined for a 3rd consecutive month to 98.8 in September of 2021 from an upwardly revised 99.6 in August and compared to market forecasts of 98.9. It is the lowest reading in 5 months mainly due to ongoing supply shortages in the industrial sector. "Problems in the procurement of raw materials and intermediate products are putting the brakes on the German economy. Manufacturing is experiencing a bottleneck recession", Ifo President Clemens Fuest said in a statement. Also, there are no signs such constrains will ease and the supply crisis is expected to last until at least the end of next year, according to Ifo economists.

European stocks closed lower on Friday, snapping a 3-day rally on weak data and uncertainty about whether Evergrande will pay interest on dollar-denominated bonds. Regarding spillover risks, ECB President Christine Lagarde said Europe had limited direct exposure. On the data front, Germany’s IFO business climate fell for a third month straight to 98.8 in September, below market forecasts of 98.9, amid intense supply shortages. At the same time, traders braced for a big change in Germany’s leadership as voters head to the polls this weekend to elect the nation’s new Chancellor. Domestically, the DAX went down 0.7% to 15,532 on Friday but ended the week 0.2% higher.

The yield on the benchmark 10-year Treasury note continued to rise to hit 1.45% on Friday, the highest since July 5th, as investors digest the latest Federal Reserve monetary policy statement. The central bank signalled stimulus could start being reduced in November and interest rates could rise as soon as next year, while cutting growth forecasts and hiking inflation projections for this year. On the week, the yield increased 9bps after touching 1.29% on Wednesday amid worries over the Evergrande debt crisis. By Friday, the property giant had not paid interest to its foreign bondholders and was uncertain if it would default or not.

New home sales in the US jumped 1.5% to a seasonally adjusted annual rate of 740K in August of 2021, following a big upward revision to 729K in July, and beating market forecasts of 714K. It is the highest reading in four months with sales jumping the most in the Northeast (26.1%), the South (6%) and the West (1.4%) while falling in the Midwest (-31.1%). The median sales price increased to $390,900 from $325,500 a year earlier. There were 378K new homes available for sales on the market, higher than 366K in July. Still, new home sales remain well below 977K in August of 2020 as high prices due to rising material costs continue to weigh on buyers' affordability.