Market Commentary - January 12, 2021
Stretched valuations alongside rising Treasury yields temper irrational exuberance with Wall Street retreating from record highs. American politics started the week drumming up a 2nd impeachment for President Trump over citing insurrection against Capitol Hill. The Democratically controlled House have already introduced a resolution on Monday scheduled for a vote later in the week. Though Vice President Pence and Republican hardliners have strongly voiced against it.
Surging coronavirus cases induced exposure reduction across European benchmarks, especially among cyclical firms. Infections across the continent have topped 25 million whilst governments have upped the pace of vaccine rollouts in hopes stifle the new variant. London remains in tier 4 lockdown with the U.K. government mulling extra restrictions resulting in the FTSE100 falling 1.5%.
The S&P200 followed overnight U.S. sentiment, slipping 26 index points. A lack of short-term optimism has left the Australia benchmark in a 200-point range since the start of December last year. Meanwhile, both the Hang Seng and Nikkei surge intra-day. Imminent de-listings of Chinese firms in the U.S. market have re-directed investor capital towards the Hong Kong exchange, the most likely recipient of future China company listings. Drug makers in Japan kept optimism elevated following reports of successful vaccine trials.
The U.S. dollar post 4 consecutive days of gains. Higher U.S. yields have thus far deterred further exposure in risk-on currencies. Oil retraces but stays above $52, whilst gold fought back tumbling momentum from Monday. Bitcoin crashes 20% to $30,250 with few exchanges like Kraken triggering limit downs halting further declines. So far into Asia’s session, the cryptocurrency has recovered back to the $36,000 level.
Figure 1 (Source: IS Prime): Bitcoin 5 minute: Wild ride for bitcoin in the past 2 days as the currency's legitimacy is called into question.
Headliner to Review
- Japan’s bank lending remained at 6.2% year-on-year in December last year (the previous value was slightly revised down to 6.2%) to 577.6393 trillion yen. During the period, deducting the trust's overall bank lending rose 5.9% year-on-year (the previous value was slightly revised to 5.9%) to 501.8972 trillion yen.
- The current account in Japan increased from 1.98 trillion yen to 2.34 trillion yen, which was better than the estimation of 2.00 trillion yen.
- The year-on-year increase in BRC Retail Sales Monitor y/y in the UK in December last year slowed again to 4.8% (the previous value continued to rise by 7.7%), but it has been rising for nine consecutive months. During the period, the year-on-year growth rate of overall retail sales accelerated again to 1.8% (previous value only continued to rise by 0.9%), ending two consecutive months of slowing growth.
Headliner to Watch
- U.S. jolts job opening set to remain stable around the 6.5M mark since September. Recent labour market data paints a stagnant picture.
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Topics: Market Commentary