Market Commentary - February 12, 2021
Subdued start in Asia with Hong Kong markets closed for Lunar New Year. Authorities urged millions of people in restraining festivities amid 21 new infections confirmed on Thursday. Meanwhile Australia’s S&P200 trickles down 35 index points following the state of Victoria announcing a snap 5-day lockdown in response to cases testing positive for the hyper-infectious UK strain. Separately, holiday lull also relieved Japanese investors from risk-on appetite as the Nikkei remains relatively unchanged.
Increasing geo-political confrontations between US – China tempered the S&P500 and Dow from any gains on Thursday. Though Nasdaq did manage to crawl into positive territory and in turn record another all-time high. Following Joe Biden and Xi Jinping’s 2-hour call for the first time since taking office, the US President outspokenly told reporters that China will “eat our lunch” if America does not spend substantially on infrastructure.
Corporate earnings kept European markets abuzz. Both the STOXX and DAX gained 0.8% and 0.6% respectively whilst the UK’s FTSE100 underperformed. Concerns are growing over UK’s variant strain. A study last week by AstraZeneca in South Africa revealed a significantly lower efficacy rate despite adjusting inoculations to deal with mutations.
Crude oil breaks its momentous advance of recent weeks to below $58 after a report released by the International Energy Agency entailed global oil demand lower by 3% than in 2019. Worries were also raised that despite demand recovery in 2021 after the turmoil brought by the pandemic, production from non-OPEC nations such as Russia is expected to increase by 35% a day in the latter half of 2021.
Another endorsement, another new high for bitcoin hitting $48,969 surpassing the previous record reached from Tesla on Monday. In following the electric vehicle maker, both Mastercard and Bank of New York Mellon announced services to accommodate for cryptocurrencies. Though short on details, Mastercard revealed later in the year, clients would have the option to make purchases via crypto, whilst BNYM had formed a digital asset unit to help address needs for crypto asset demand.
Gold falls to $1,825 and mixed performance for the U.S. dollar against majors as weaker than expected claims figures see an improving but lethargic labour market.
Figure 1 (Source: IS Prime): USDCNH Daily : China's yuan steadies ahead of Lunar New Year after closing at multi-year highs on Tuesday.
Headliner to Review
- US unemployment claims figures saw a slight improvement from 812K to 793K but missed the 755K consensus. Job growth is expected to remained soft until Spring when the effects of the vaccine roll-out become more apparent.
Headliner to Watch
- Economic Forecast released by the EU anticipates “a challenging winter but like at the end of the tunnel”. A resurgence in cases and the introduce of the variant strain leading to containment measures will weigh on Q1 and Q2 economic indicators. However, like everyone else, hopes are on the vaccination program leading to a return to normality.
- Following a 16% rebound in Q3 data, the U.K economy is expected to grow 0.5% in Q4. Largely a result of national wide lockdowns in December’s and the uncertainty brought forth by Brexit negotiations.
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Topics: Market Commentary