Market Commentary - September 15, 2020
Wallstreet bounced on the back of mega multi-billion-dollar deals from Softbank’s sale of chip designer Arm to Nvidia for $40bn, to Oracle outbidding Microsoft for social media platform TikTok. Both Nvidia and Oracle gapped above 5% on open, with the former ending the session up 5.82%. Likewise, the latter held onto most gains, up 4.32%. Europe ended the session relatively unchanged as gains in tech and travel offset losses from energy. Despite optimistic retail sales and production data out of China this morning, Asia is off to a mute start. Nikkei unchanged on news of Yoshihide Suga’s landslide victory in becoming Japan’s next prime minister with his win already priced in.
Backlash against Boris Johnson’s proposed internal market bill by high-profile ex-prime ministers halted the pounds freefall. Voicing in opposition, Tony Blair, Gordan Brown, John Major and Theresa May as they see Johnson’s unilateral amendment risking the country’s standing and reputation. The bill is currently making its way through parliament whereby later in the week Commons will vote. Elsewhere, the Hong Kong Monetary Authority sold 388m HKD as USDHKD attempted to breach the lower end of the 7.75 – 7.85 band during the U.S. session. Despite geopolitical rising geo-political tensions, China’s yuan has confidently settle’s above a 16-month high. Among developed nations, China is expected to be the only one to post positive economic growth at years end. Release of today’s positive leading economic indicators further propelled the yuan’s rise intra-day.
Figure 1 (Source: Refinitiv): USDCNH - Prospect of being the only developed nation world wide to post positive growth for 2020 sees China's yuan hit a 16-month high.
Crude oil prices remain firm after declines early September as the tropical storm was upgraded to a Hurricane Sally yesterday. Estimated to hit the U.S. Gulf on Tuesday, 17% of U.S crude oil production will be disrupted. After landfall, facilities will remain closed as analyst see significant onshore flooding impacting infrastructure.
On Monday, WHO reported a daily record high in the number of new coronavirus infections, with more than 300,000 reported. According to the WHO, the largest increase was in India, US and Brazil by order. For the total cases, there are 6.7 million in the US, 4.9 million in the India and 4.3 million in the Brazil.
Headliner to Review
- Meeting minutes from the Reserve Bank of Australia is consistently on the optimistic side on the market. The central bank noted the economy is recovering better than expected even though job growth and inflation has slowed. The RBA is expecting the number of active job seekers to continue increasing through the rest of the year.
- China’s economy continued to recover in August as leading economic figures performed better than expected:
- Industrial production increased to 5.6% compared to consensus 5.1%. Delving deeper into the report, manufacturing grew 6% whilst an uptick in mining activity saw modest 1.65 increase.
- Since COVID-19, retail sale for the first time posted positive numbers jumping to 0.5% from -1.1% ahead of analyst expectations of 0.0%
Headliner to Watch
- Labour market in the U.K. is expected to deteriorate for the month of August with claimant count change increasing to 99.5K and the unemployment rate higher at 4.1%.
- After peaking in July, European economic sentiment is set decline slightly from 64.0 to 63.0 as economic activity levels off after the initial spike from pent-up consumer demand and back-logged factory orders.
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Topics: Market Commentary