Market Commentary - December 28, 2020
Christmas ends on a positive note as lingering uncertainties for 2020 finds a clearer path forward. Under immense pressure from congressional parties, Monday saw President Trump sign to action the 900bn stimulus package. Alongside relief for American households, the legislation further averted a partial government shutdown on Tuesday by releasing 1.4tn in spending to fund federal agencies. Overnight futures on Wall Street rejoiced as all board-based benchmarks surge towards all-time highs.
With a historic Brexit trade agreement signed on Christmas eve, Downing Street released a 1,246-page text of the deal on Saturday just five days before the U.K. exits one of the worlds’ significant trading bloc. The FTSE100’s response was relatively mute whilst the STOXX and DAX rose 1.17% and 1.52% respectively. Investor sentiment received a further boost as Europe implemented a coordinated vaccination campaign following regulatory roll-out for Pfizer-BioNTech’s vaccine shot with AstraZeneca expected to obtain their medical approval later this week.
As China’s crackdown on monopolistic practices accused from fintech goliaths Ant Group and Alibaba, the Hang Seng bucked the negative mood surging to an intra-day high of 26,541. Likewise, the Japanese Nikkei followed suit fueled by a quicken global economic recovery as the world begins inoculations and U.S. injects cash.
On thinly traded liquidity, bitcoin received a Christmas bump to record highs at 28,353 on Sunday after closing at 23,718 last Thursday. Nevertheless, the 20% move could not be sustained, and the cryptocurrency retreated down to 27,000. Bitcoin’s recent rise back to prominence came alongside greater vocal institutional interest. From payment services like Pay Pal to asset managers like Paul Tudor Jones endorsing the digital currency.
Elsewhere, the U.S. dollar continues to debase across the board as the Treasury mints more cash. In anticipation of a weaker dollar, China lifts its yuan’s mid-point to 6.5236, a 30-month high. Gold is higher by $14 as markets re-evaluate future inflation levels whilst crude stays above $48 as an optimistic economic recovery out weights risk of recent travel restrictions.
Figure 1 (Source: IS Prime): Nasdaq Minute (Asia Session) : Nasdaq rallies on open following Trump signing a 2.3tn spending bill, inclusive of a 900bn pandemic relief package and 1.4tn in government expenditure.
Headliner to Review
- In China, the cumulative value industrial enterprises above designated size was 574.450 billion yuan while the previous value was 5012.42 billion yuan.
- Prelim Industrial Production m/m in Japan dropped from 4.0% to 0.0%, which was worse than the expectation 1.4%.
Headliner to Watch
- Lack of news today as Australia, New Zealand, U.K and Canada celebrate Boxing Day.
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Topics: Market Commentary