Market Commentary - March 30, 2021
Shipping traffic resumes in the Suez Canal after the 220,000-ton Ever Given ship was finally freed after blocking vital waterways for a week. Re-floating the vessel took a fleet of tugboats, intensive dredging, a full moon, and high tides. The closure cost an estimated $10bn in global trade a day with many ships now thrown off schedules. Despite the recovery, crude surprisingly ended Monday higher, just above $61.50, positioning itself ahead of OPEC’s meeting on Thursday.
Contagion fears rife within Wall Street following Bill Hwang’s Archegos Capital Management historic margin call. Following the $20bn fire sale that sent blue-chips tumbling, both Credit Suisse and Nomura have forewarned significant losses whilst Goldman Sachs, Deutsche Bank and Morgan Stanley escaped down to the wire. Nonetheless, the fallout failed to shake benchmarks with Dow Jones hitting fresh highs. Meanwhile, Biden’s administration is looking to quickly expand vaccination eligibility after fresh reports over a new surge in coronavirus cases.
Choppy session in Europe with indices gapping lower over Archegos’s forced liquidation. However, investors came out unscathed, saved by a late session surge as the likelihood Bill Hwang’s fund is done with their fire sale improved.
Banks dragged the Japanese Nikkei 0.37% lower, further lockdowns across Australia’s Sunshine state tumbled the S&P200 down 0.8% whilst Hong Kong rallied 0.81% following a rebound in China’s market.
The U.S. dollar outperformed against exotics but mute action across majors. Gold finally broke down $18 to $1,713 after weeks of consolidation and bitcoin back above $57,000.
Figure 1 (Source: IS Prime) USDTRY Daily : Despite reassurances from Turkey's new central bank governor that a rate cut is not guaranteed next month, the lira continues to climb towards previous historic lows at 8.58.Headliner to Review
- Japan’s job-hunting ratio in February this year was 1.09, which was lower than the previous value of 1.11, which was in line with market expectations, meaning that for every 100 applicants, there were 109 job vacancies.
- Japan’s unemployment rate unexpectedly maintained its previous value of 2.9% in February this year, and the market had expected it to rise to 3%. During the period, the employment participation rate was 61.9%, which was higher than market expectations and maintained the previous value of 61.8%.
- Japan’s retail sales in February this year rebounded sharply by 3.1% month-on-month (the previous value was dropped by 1.7%), ending the two consecutive declines, which was far exceeding market expectations and rebounding by 0.8%.
- In February this year, the number of new residential construction permits in New Zealand dropped by 18.2% month-on-month (the previous value was increased by 1.5%), to 3,211 units, the worst decline since March last year (down 20.9%), ending six consecutive increases Month, also lower than 3,363 sets in the same period last year.
Headliner to Watch
- Inflationary pressure in Germany expected to continue as the EU state post 4 consecutive months of positive CPI data. Likewise, CPI data in Spain is expected to rebound from 0% to 0.7%.
- American consumer confidence intends to edge higher from 91.3 to 96.9 as President Biden’s relief package reverberates within the economy.
- China’s manufacturing PMI expected to post 13 months of consecutive expansionary figures, from 50.6 to 51.3. The fact that Beijing plans to pull government stimulus away from the economy is a clear indication, the recovery from the pandemic is now seen as self-sustaining.
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Topics: Market Commentary