Market Commentary - March 30, 2021

Posted by Kevin Jock on Mar 30, 2021 7:57:28 AM

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.

Market Commentary - March 29, 2021

Posted by Kevin Jock on Mar 29, 2021 6:13:53 AM

    Praying for high tides in hopes to assist rescue teams in dislodging the 220,000 tonne Ever Given container ship. If last-ditch efforts fail, Egyptian President el-Sisi has ordered the vessel be unloaded, a time-consuming task, with implications this whole fiasco in the Suez Canal drag on for weeks. A rebound in Friday’s sessions capped the week’s end higher for both brent and crude. Some good news Monday open as headlines suggest the cargo ship has partially refloated.

    Meanwhile, a late session surge saw Wall Street end in positive territory ahead of President Biden’s anticipated unveiling of his $3tn economic recovery package in Pittsburgh, Pennsylvania this week Wednesday. A $20bn fire sale by former Tiger Cub of Tiger Management, Bill Hwang initially spooked markets as his family office, Archegos Capital Management was the centre of one of the greatest margins calls of all time. Forced to liquidate substantial holdings in Chinese tech giants and U.S. media conglomerates.

    European markets tagged along America’s late surge as the German Dax outperforms posting 4 consecutive weeks of gains. Despite the bloc being embroiled in slower than scheduled vaccination schedules and a third COIVID-19 wave, talks of U.S. stimulus alleviated rising risk. Elsewhere, the FTSE100 higher ahead of England easing lockdowns on Monday. Gatherings sizes are set to increase and stay at home orders replaced by health guidelines.

    Cautious start to the week for the S&P200 and Nikkei, both retreating intra-day whilst the Hang Seng bucked the trend up 0.6% thus far. Currencies across the board gained against the greenback on Friday, gold continues to range around the $1,730 level and bitcoin rebounds back above $55,000.

Market Commentary - March 26, 2021

Posted by Kevin Jock on Mar 26, 2021 8:23:11 AM

    Suez Canal blockage saga continues for a 3rd day with rescuers warning it could take weeks before container ship Ever Given is cleared. Figures thus far detail $9.6bn worth of daily marine trade alongside 185 shipping vessels in limbo. Despite international supply worries pushing crude oil above $60, the move proved temporary with Europe’s worsening coronavirus situation clouding short-term global demand outlook as prices reverted to $58.

    Lacklustre demand for 7-year treasury bill spooked Wall Street only for benchmarks to recovery later in the session as President Biden boasted America’s vaccination achievements with plans to double the existing target to 200 million administered by April’s end. During the press conference Biden’s pledge to outspend China on innovation and infrastructure stoked already volatile geo-political tensions. Especially as China slapped retaliatory sanctions on the U.K. over Downing Street’s claim over Uyghur abuse. Among blue-chip’s U.S. banks outperformed following the Federal Reserve’s plan to discard pandemic-era limits on dividends.

    Despite being mired in vaccination disputes overshadowing the bloc’s road to recovery, European markets followed Wall Street’s lead higher. Likewise, Asia followed through overnight momentum as benchmarks rallied on open. Though among investors there is concern over the horizon by China’s fresh drive to deleverage. More recently, resulting in a major Chinese property firm being downgrade by Moody’s as investor risk-appetite pare off in a debt-laden sector.

    Though intra-day volatility was prevalent in the U.S. dollar, the index was mostly unchanged among majors. Gold continues to fluctuate between a tight range $1,720 – $1,750 whilst a collapse in bitcoin’s rollover futures saw the asset slump to $52,000.

Market Commentary - March 25, 2021

Posted by Kevin Jock on Mar 25, 2021 6:23:13 AM

    Wall Street struggled to shake off newfound bearish sentiment as leading economic indicators disappoint market. Wednesday saw technology decline outpace cyclicals with Nasdaq down 2% whilst the Dow Jones ended unchanged. Meanwhile, before the Senate committee, Federal Reserve Chair Powell dismissed Republican lawmaker’s concern President Biden’s $1.9tn could overheat the committee and noted the market volatility we’ve recently experienced has been an “orderly” adjustment.

    Mixed results across Europe with Germany’s DAX edging lower despite a reversal from Chancellor Merkel over a controversial Easter lockdown. Finger pointing begins as the EU mistaken a stockpile of 29m AstraZeneca vaccine doses as illegal shipments ready for international distribution. On the bright side, the shortage of vaccinations is seemingly resolved as Spain welcomes the news rallying 0.7%. Following an onslaught of criticism dragging into dispute that the initial efficacy of 79% utilized outdated clinical data, fresh reports by AstraZeneca reveal a slightly lower effective rate of 76% in a U.S. study.

    Recent performance from the Hang Seng has been underwhelming as it corrects back to levels unseen since the start of January. China’s recent tapering does Hong Kong no favours as Beijing implements their exit strategy from pandemic-era stimulus. Elsewhere Australia and Japan rally on open.

    Crude oil rebounded $3.50 to above $60.50 after one of the worlds largest container ships ran aground in the Suez Canal consider a vital trade artery. Attempts to dislodge the 200,000-ton Ever Given have failed, disrupting approximately 10% of daily seaborne trade, of which includes liquefied natural gas.

    The dollar strengthened among peers, gold at $1,735 and waning demand for bitcoin see’s the cryptocurrency fall to $52,000.

Market Commentary - March 24, 2021

Posted by Kevin Jock on Mar 24, 2021 7:30:04 AM

    Testimony from U.S. Treasury Secretary Yellen and Federal Reserve Chair Powell tempered Wall Street’s optimism from Monday. Major indices declined with blue-chips Dow Jones underperforming slipping 1% whilst Nasdaq surprisingly held its ground. Both speakers re-iterated the same message, President Biden’s $19tn stimulus plan will assist America back to full employment by 2023 and the recovery thus far has progressed quicker than expected.

    On-going coronavirus woes left European benchmarks with consecutive days of decline. Yesterday, Germany announced an extension of lockdowns till April 18th as Chancellor Merkel considers more restrictive measures for Easter period. Meanwhile, AstraZeneca has been put on the defensive after an independent monitoring board claimed the drug-maker included outdated information to determine clinical trial results. The company said it will publish more data within the next 48 hours.

    Hong Kong is not without its own vaccine troubles following a surprise announcement by the government to suspend BioNtech jabs this morning. The partnering pharmaceutical group Fosun had informed the government of packaging defects but believes the vaccine itself is still safe. Upon reception, the Hang Seng tumbled another 2% today alongside the Nikkei down 1.5%.

    Majors fell against the dollar whilst the Turkish lira’s plunge cascades into a liquidity squeeze spilling over onto the swap market as rates soar 1,400% with investors all stampeding out of the door. Crude oil plunged 6.2% over oversupplied concerns resulting from renew lockdowns, gold weakens to $1,726 and bitcoin closes at $54,400.

Market Commentary - March 23, 2021

Posted by Kevin Jock on Mar 23, 2021 5:35:05 AM

    Wall Street rebounds convincingly following a turbulent week with Nasdaq outperforming gaining 1.8% on Monday. Yields surprisingly calm as the 10-year treasury bill stabilises below 1.7%, despite assertions by the Federal Reserve to let looser capital requirements for banks to expire in March. Previously introduce to support money liquidity during the COVID-19 pandemic. Elsewhere, President Biden is anticipated to unveil an additional 3tn government spending package this week for infrastructure, energy, and education. The ambitious 2nd package would complete one of Biden’s pledges he was elected for in 2020.

    Meanwhile, virus resurgence across Europe continue to weigh down major indices alongside a vaccine distribution schedule in doubt despite the ECB ramping up bond purchases from 18bn to 21.1bn. Reintroductions of social restriction measures have raised concerns on knock-on effects on the economy.

    Mixed start across Asia with both the S&P200 and Nikkei reversing early gains, whilst the Hang Seng tumbled 1.9% on open. Growing geo-political tension hampered Hong Kong sentiment as the American, Brits, The EU and Canada imposed sanctions across multiple Chinese nationals and entity over human right abuse on Uyghurs in Xinjiang. In response, China enacted sanctions of their own.

    The U.S. dollar edged lower across majors, gold closes at $1,738 and crude shores up just above $61. Bitcoin tumbles from $58,000 to $55,000 following reports that cryptocurrency fund inflows have declined 58% last week.

Market Commentary - March 22, 2021

Posted by Kevin Jock on Mar 22, 2021 5:36:23 AM

    US – China relations unlikely to improve in the near-term after two days of negotiations ended Friday with no material concessions from either side. Especially after Thursday’s start where U.S. secretary of state and Beijing’s foreign ministers held their “tough” rhetoric hurling accusations at each other. The S&P500 and Dow Jones weakened as investors continue to digest the Federal Reserve’s meeting, while Nasdaq manage to notch itself bull territory with treasury yields holding steady.

    Outlook across Europe worsen as fresh lockdowns from France, Italy, and Germany bite down growth prospects. Previous forecast had assumed a gradual easing of restrictions in March, however had since been revised to accommodate the current third wave, pushing lifting restriction towards the end of Q2. Vaccination delays also weighed on European markets with Boris Johnson pleading to other EU nations in vetoing Brussels plans to black vaccine exports to the U.K.

    Asia opened upbeat as both Australia and Hong Kong rallied though the Nikkei declined 1.1%. Further clarity from the BOJ depicts plan to chip away at 6tn yen in yearly equity purchases launched 6 years away, as they deem it unsustainable.

    Crude oil rebounds losses on Friday to close above $61. Last week saw volatility spike in the commodity as two opposing forces clash. Whilst an uneven global pandemic recovery drew concerns over sustained demand in coming months, Saudi Arabia’s Aramco refinery was victim again to another assault by Houthi rebels. Though the series of latest attack did not affect oil production.

    Whilst the dollar index capped the week’s end higher, the Turkish lira grabbed headlines on Monday open, following the shock sacking of their central bank chief early Saturday morning. Naci Agbal has been the third governor in less than two years, appointed to fend off the country’s ever-growing risk of hyperinflation. However, last week’s surprise 200 basis rate rise irked President Erdogan’s, of whom believe there is no relationship between inflation and interest rates. The USDTRY gapped higher 16% on open.

    Elsewhere, gold finds support at the $1,730 level and bitcoin finds equilibrium around $58,000 since attempts to break above $60,000 failed.

Market Commentary - March 19, 2021

Posted by Kevin Jock on Mar 19, 2021 7:42:38 AM

    Wall Street reversed Wednesday’s gains defying the Federal Reserves’ rhetoric with 10-year yields soaring back above 1.7% to a 14-month high. Risk was further heightened ahead of quadruple witching on Friday where simultaneously expiration of varying futures and options will occur. Meanwhile, the first face-to-face meeting between high level US – China officials got off to a rocky start in Alaska. U.S. Secretary of State went on the offensive, bringing to the forefront China’s involvement in cyber-attacks, minority mistreatment and control over Hong Kong. Considering the start, expectations have plummeted for a potential Biden – Xi meeting in April.

    String of cascading lockdowns across Europe spooked risk-on appetite, with France being the most recent, putting Paris and few other regions under strict lockdown for a third time. Whilst a hitch in the supply lines for the U.K. is to derail Britain’s vaccination schedule after delayed a from India. On a positive note, German, France, Italy and Spain will resume their jab of AstraZeneca’s vaccine following the EU drug regulator reiterating it’s safety.

    Markets across the Asia-pacific slid following overnight U.S. sentiment. The Hang Seng down 450 index points as Hong Kong battles its 5th wave with some criticising the inhumane containment measures taken. Likewise, the Nikkei slipped 290 index points after the BOJ released its monetary policy review. Governor Kuroda attempted his best to avoid any hawkish impressions but failed nonetheless.

    Alongside surging yields, demand for the U.S. dollar grew on Thursday across the board. An outlier being the Turkish Lira, appreciating 2.3% after the central bank unexpectedly raised rates by 200 basis points to 19% in an attempt to tame inflation. Crude oil tumbled over $4 to $59.47 over concerns the market is over-pricing rising demand fuelled by a global campaign to vaccinate and fiscal stimulus. Gold slipped slightly, whilst bitcoin was unchanged.

Market Commentary - March 18, 2021

Posted by Kevin Jock on Mar 18, 2021 5:47:18 AM

    Federal Reserve Chair Jerome Powell did not disappoint amid the much-anticipated FOMC meeting on Wednesday. The central bank reaffirmed their dovish stance projecting near-zero interest rates till 2024 despite a pick-up in inflation expectations, of which the Fed deems fleeting. Economic growth was upgraded to 4.2% this year, core inflation to average 1.8% and joblessness to drop below 5%. Wall Street welcomed both the tune of the statement and the tone of the conference with the Dow Jones settling at all-time highs. Both the S&P500 and Nasdaq recovered from an intra-day tumble following a surprise comment by President Biden early session when he said Putin “will pay a price” for Russia’s attempt at undermining US 2020 elections.

    U.S. sentiment seeped into European counterparts as the Euro Stoxx briefly breached into uncharted territory whilst the German Dax closed at its highest. Despite ECB President Christine Lagarde expecting a contraction in Q1, Powell’s remarks “When the U.S. economy is strong that strength tends to support global activity as well” suggests a U.S. recovery would too lift Europe out of its trough. On the vaccination front, the EU is considering blocking supplies to the U.K under emergency Covid controls calling it a “crisis of the century”.

    Ahead of high-level talks between U.S. – China on Thursday, officials envision a proper meeting between President Biden and Xi a month after. Though tensions remain on a tight rope after the Biden administration sanctioned 24 Chinese and Hong Kong officials for their role in undermining autonomy in the territory. The Hang Seng fell 1.1% on the news. Meanwhile, Australia’s S&P200 edged higher on improving jobs data and the Nikkei up 0.6% during Asia session as the government announces plans to lift the state of emergency on March 21st.

    Demand for the Greenback dropped sharply across the board following FOMC, gold closed higher at $1,745 and oil drifts lower as last months’ supply shock dissipates. Elsewhere, bitcoin back up above $58,500.

Market Commentary - March 17, 2021

Posted by Kevin Jock on Mar 17, 2021 6:03:00 AM

    Wall Street treads softly ahead of FOMC on Wednesday with Dow Jones retreating from record highs and S&P500 mute. Revised optimistic outlooks from analyst for bluechips Apple and Microsoft led Nasdaq 0.6% higher whilst 10-year Treasury yields stay elevated above 1.6%. No policy changes are expected, with investors focusing in whether Federal Reserve Chairman Powell has changed his tone during his press conference, as well as deciphering changes in the tune of the central banks FOMC statement.

    At least 16 EU nations have now either suspended or limited the usage of AstraZeneca’s vaccine over risk of blood clotting despite counterclaims there is no hard evidence of linkage. Even so, the EU regulator has stated overalls benefits from the jab far outweigh the risk. As the path of economic recovery from 2020’s pandemic become clearer, Europe’s benchmarks steady following dramatic gains of recent weeks, alongside support from the ECB pledging to speed up the pace of asset purchases. In contrast, increasing signs from BOE Governor Andrew Bailey depict a central bank likely to sit on their hands leaves the FTSE100 much to be desired.

    In Hong Kong, social distancing will be extended till March end and snap street lockdown now the norm. The Hang Seng subdued, as is the S&P200 and Nikkei with investors awaiting the Federal Reserve meeting.

    The U.S. dollar little changed among majors as was gold whilst crude oil crept lower to $64.94. Bitcoin found support at the $53,000 rebounding to $56,000 as Elon Musk officially changes his title to “Technoking of Tesla” and Tesla’s CFO to “Master of Coin”.

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