Market Commentary - April 26, 2021

Posted by Kevin Jock on Apr 26, 2021 6:25:13 AM

     After a volatile week, Wall Street settled somewhat flat near record highs. Strong corporate earnings and upbeat outlooks throughout the week proved the post-pandemic economic recovery is well underway. Only to be briefly overshadowed by fleeting shock headlines surrounding global resurging infection rates and a rumored capital gains tax hike in the America. Geopolitical tensions between the U.S. – Russia worsened following sanctions, whilst investors brush off elevated U.S. – China tensions to invest $6.6bn on IPOs in mainland and Hong Kong firms.

    Across the Atlantic, European markets ended Friday’s session relatively unchanged from the day before. This despite solid earnings announcements and expanding manufacturing and services PMI releases. Meanwhile the U.K. managed to etch out a 0.3% gain on exceptional retail sales data as Prime Minister Johnson braces for allegations from a former aide that the government could have implemented a better response to the COVID pandemic during winter that would have prevented thousands of deaths.

    In Asia, the Japanese Nikkei fell as much as 1% on open as the government enacted a state of emergency, beginning 25th April till 11th May, hoping to stifle recent case spikes. The affected prefectures include Tokyo, Osaka, Hyogo, and Kyoto. Election results saw Prime Minister Suga’s ruling LDP party lose all three by-elections ahead of general election held in 6 months. Recent scandals and poor performance in handling the pandemic chipped off a few percentage points in his approval rating. Elsewhere, the S&P200 gapped lower, and the Hang Seng subdued.

    With yields finding equilibrium at pre-pandemic levels, demand for the U.S. dollar has become lackluster among majors as the index resumes its’ long-term downtrend. Crude fluctuates around $62 and likewise gold retreated to $1,776. Weekend trading saw bitcoin hit $47,000, its lowest level since March, before rebounding to over $52,000 during Asia session today.

USDTRY-Apr-26-2021-05-20-21-93-AM

Figure 1 (Source: IS Prime) USDTRY Daily : Turkish lira extends losses despite reassurances from the new central banking chief to keep inflation under wraps. The issue now lies in investors confidence as previous hawkish endeavors was met with firings.

Headliner to Review
  • German ifo business climate expected to notch higher from 96.6 to 97.8 despite recent extension in lockdowns and continuing elevated cases across the bloc.
  • Following a contraction in February, both headline durable and core durable goods are expected to expand 1.6% and 2.5% respectively as households turn optimistic from President Biden’s new infrastructure spending bill.
  • The BOJ will report their monetary decision tomorrow with no changes anticipated in the policy rate or quantitative easing program. Focus will trend towards the BOJ’s outlook especially after the new state of emergency measures implemented.

Headliner to Watch

  • Manufacturing and Services PMI across the globe painted a similar picture of economic recovery.
    • EU manufacturing and services expanded 63.3 and 50.3 from 62.5 and 49.6 respectively.
    • UK manufacturing and services expanded 60.7 and 60.1 from 58.9 and 56.3 respectively.
    • US manufacturing and services expanded 60.6 and 63.1 from 59.1 and 60.4 respectively.
  • U.K retail sales posted a 5.4% gain compared to a 1.5% consensus largely due to easing of lockdown.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Ben Li
Kevin Jock

Topics: Market Commentary

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