Market Commentary - November 12, 2020
Modest gains on Wall Street amid Veteran’s day while Nasdaq back in favour jumping 2.3% as stay-at-home firms recuperated some ground following this week’s sell off. Apple and Amazon were among the better performers, higher by 3.04% and 3.37% respectively. Investors sought refuge in tech as America struggles to contain their second wave. Recent stats in new daily infection cases topping 139K saw New York implementing a 10pm curfew on bars and restaurant. Other risk has risen surrounding the lame-duck period and disruption President Trump may cause. Since Joe Biden’s wins, the administration has not shied away from restructuring the Pentagon, increasing geopolitical tension with China and frustrate trade ties with Europe.
Across the Atlantic, European markets held onto vaccine-driven gains, rallying for 3 consecutive days. Comments by ECB President Christine Lagarde further buoyed benchmarks after outlining plans for additional easing in December during yesterday’s ECB Forum. Meanwhile the FTSE advanced 1.4% amid on-going Brexit negotiations. Despite a looming deadline, there is enough optimism a conclusion will be met warranting negotiators to carry on talks next week.
Asia saw profit-taking in Australia as banking underperformed heavily, offsetting gains among other blue-chips. Disappointing machinery orders in Japan resulted in the index edging lower denting prospects for a capital expenditure recovery. Whilst China’s crackdown on both tech and Hong Kong’s democracy weighed down the Hang Seng by 0.8% thus far. The city’s government expelled 4 pro-democracy lawmakers, prompting another 15 to potentially walk-out en masse.
Figure 1 (Source: IS Prime): USDTRY : Much like the U-Turn by Turkey President Erdogan, the Turkish lira does a 180 flip.
Since Pfizer’s announcement, the American greenback is seemingly shedding its’ status as a risk-off asset. Yesterday saw the U.S. dollar gain against the pound and euro, whilst remain firm towards the Aussie. Though, speculation the RBNZ would implement negative rates scaled back saw the Kiwi appreciate. Among exotics, the Turkish lira surged another 4.5% as President Erdogan publicly signed off on the new central bank head and economy czar. With Erdogans’ endorsement, the central bank is expected to lift weekly repo rates by 400 basis points to 14.25% in their monetary meeting next week. Elsewhere gold resumes its declines, oil stays around the $41.50 mark and bitcoin gains another $400 crypto dollars.
Headliner to Review
- During the annual ECB Forum, ECB President Christine Lagarde signalled clearly the central bank would expand its pandemic emergency purchase program by as much as 500bn in hopes to support Europe through its second wave.
- Q3 saw the U.K. rebound from a pandemic induced contraction in economic growth. Though figures were less than anticipated. Quarterly growth increased from -19.8% to 15.5% with 15.8% expected. Leading indicators also depict less optimistic prospects with month industrial production, manufacturing and business investment statistics lower than analyst anticipated.
Headliner to Watch
- America expected to see a slight in CPI data whilst core CPI to remain unchanged. The former is expected to edge lower from 0.2% to 0.1%, the later to stay at 0.2%.
- U.S. unemployment claims expected to resume declines from 751K to 730K following last weeks overestimation by analyst. Coming into December labour markets are expected to see an uptick in part time employment especially for Christmas Holidays.
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Topics: Market Commentary