Market Commentary - January 11, 2021
Record highs again on Wall Street following President-elect Biden announcing plans for trillions more in further fiscal relief, including boosting stimulus checks to $2,000. Calling the $900bn bill signed last month by President Trump as a “down payment” whilst for his plans “the price tag will be high”. Meanwhile, the 10-year Treasury shot up to 1.12% as investor overhaul inflation expectations for 2021.
Likewise, the planned buffer for U.S. economic growth reverberated across European benchmarks boasting their best week in 2-months. Rising optimism from a U.S. Democratic Senate sweep and continuing vaccine rollouts saw the STOXX and DAX indices gain 0.7% and 0.6% respectively.
Asia-pacific indices opened Monday more cautiously as Australia fell 41 index points and Nikkei futures slips 235 points on a Japanese bank holiday. Defying expectations, the Hang Seng surged as high as 1.3% intraday, despite last week’s sell off in China’s telecom stocks following their removal from U.S. exchanges and plans by U.S. banks to delist approx. 500 structured HK investment products. Better growth prospects and 50 mainland funds expecting to launch in the coming months fueled the momentum.
The U.S. dollar index continues to rebound as investors temper their bearish bets as rising yields deter from alternative risk-on currencies. Elsewhere, crude takes a breather retreating below $52 whilst gold tumbles $64 down to $1,848. In focus, bitcoin experiences one of its worst Mondays, plunging 20% from historical highs of $41,989 to $33,745. Some $170 bn has been wiped off the cryptocurrencies market cap as analyst largely attribute the decline to whale’s profit-taking.
Figure 1 (Source: IS Prime): Bitcoin Daily : A 20% intra-day plunge in bitcoin befitting a meteoric rise since late 2020.
Headliner to Review
- Canada lost 62,600 jobs in December last year, which was worse than expected, a decrease of 27,500, the first decline since April last year. The unemployment rate was 8.6%, an increase of 0.1% month-on-month, which was in line with expectations.
- Full-time positions increased by 36,500, while part-time positions decreased by 99,000. The average weekly working hours fell by 0.3%. It fell for the first time since April last year.
- In the United States, the number of non-farm new jobs decreased by 140,000 in December last year, the first decline since April, which is a drop from the market’s original estimate of an increase of 71,000. The unemployment rate remained at 6.7%, slightly lower than market expectations. Last month, there were 95,000 jobs in private companies and 45,000 jobs in government departments. However, manufacturing jobs increased by 38,000, which is higher than the expected 20,000.
- In China, the figures of CPI and PPI are better than expectation. CPI rose from -0.5% to 0.2%. PPI increased from -1.5% to -0.4%.
Headliner to Watch
- BOC will release their business outlook survey on Monday. Sentiment across businesses will become a significant factor in the central bank’s long term rate decision for 2021.
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Topics: Market Commentary