Market Commentary - October 30, 2020

Posted by Kevin Jock on Oct 30, 2020 7:07:27 AM

    A little reprieve on Thursday for global markets following one of the biggest routs since February despite worldwide coronavirus cases rising by more than 500,000 yesterday amid Germany and France locking down. Meanwhile, at least nine states in America broke daily records in new infections.

    Nonetheless, Wall Street eked out some gains on the back of tech’s resilience within current quandaries. Quarterly profits from juggernauts like Google, Amazon, Facebook and Apple had exceeded analyst estimates.

    Across the Atlantic, fresh stimulus hopes from the ECB buoyed European benchmark higher. Collectively, Euro Zone members will be issuing 1.2tn in government bond sales next year of which 460bn is expected to be purchased by the central bank. The Euro dollar received the news via sinking 70 pips to below 1.7000.

USDHKD-1

Figure 1 (Source: IS Prime): USDHKD daily chart : Seemingly worlds largest IPO has more influence in the direction of the HKD than the HKMA.

    Asia’s open sees indices and futures poised to resume declines with investors reducing exposure ahead of next weeks uncertain presidential elections. Though Biden general popularity overarches the incumbent, a late surge in swing states has President Trump minutely ahead.

    Elsewhere, the USDJPY approaches an important double 0 level (104.00) having previously bounced from. Following months of intense demand, the HKD dollar retreated off of the strong end of the band (7.75) subsequently after Ant Group closed its institutional IPO book.

    Crude oil continues to slump another 3.4% to levels unseen since June as COVID’s resurgence derails demand.

Headliner to Review

  • The advance GDP made a historic rebound in Q3 with GDP flipping from -31.4% to 33.1%, which was even better than the forecast of 32.0%. Despite on-going coronavirus threats, reluctance to re-impose lockdown measures and ensured economically the nation continues to steam ahead. Unemployment claims figures had a slight improvement from 791K to 751K. Advance GDP Price Index rose from -1.8% to 3.6%.
  • There is no change from European Central Bank (ECB) as expected. The main refinancing rate remained at 0.00%. ECB is getting ready to unleash more stimulus plans for December in efforts to buoy the European economies.
  • The unemployment rate in Japan remained unchanged at 3.0% in September, highest in 3 years. Tokyo Core CPI declined from -0.2% to -0.5%. Prelim Industrial Production in Japan increased from 1.0% to 3.0%. from the economic figures, it shows a sign of an uneven recovery from the coronavirus crisis.

Headliner to Watch

  • Friday will see GDP figures released among Euro Zone members and Canada.
    • As the data does not encompass recent lockdown implications, Q3 GDP saw a rebound from Q2 with Eurozone prelim flash GDP to increase from -11.8% to 9.5%
      • French flash GDP from -13.8% to 15%
      • Spanish flash GDP from -17.8% to 13.5%
      • German flash GDP from -9.7% to 7.3%
      • Italian flash GDP from -12.8% to 11.1%
    • Slower economic growth expected out of Canada with monthly GDP figures to moderate from 3% to 0.9%. For the year of 2020, the BOC estimates a 5.5% contraction.

 

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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