Market Commentary - January 5, 2021

Posted by Kevin Jock on Jan 5, 2021 6:41:24 AM

    Volatile start for 2021 as Wall Street tumbled with the VIX index gaining 18% on Monday over rising global uncertainty. Investors wrangled with a conflicting political environment ahead of Georgia’s Senate run-off. A Democrat’s win would almost certainly ensure greater U.S. fiscal stimulus but at the expense of higher taxes for the wealthy and less business-friendly regulatory reform. Alternatively, if Republican’s retain majority, the recently passed bill would most likely be all the relief American households would receive. Meanwhile, U.S. deaths top 354K and the new faster spreading variant risks boosting infections tempering optimism.

    European markets followed suit, failing to sustain momentum fuelled by vaccination campaigns and the landmark Brexit trade deal. The STOXX and CAC slipped, whilst the DAX was rejected from closing at all-time highs. The FTSE fared better surging as high 6,666 intra-day but settled for 6,552 at sessions end despite a new national-wide lockdown. The U.K also began administering the Oxford/AstraZeneca vaccine on Monday and is expected to increase the pace of shots in Q1 in hopes to combat the fast-spreading variant.

    Mixed price action in Asia, with Australia recovering overnight losses, Japan relatively unchanged and Hong Kong gaining 180 index points following a backflip from the NYSE in delisting Chinese oil firms.

    Alongside rising risk, the U.S. dollar index regain some ground as investors began rotating back to risk-off assets. The pound was among the worst performers as bad new piles on. Gold soared $48 to a 2-month high whilst bitcoin plummets from 33,600 to 27,900 and ultimately closing at 30,000 following New Year. Elsewhere, crude falls back around $47 after OPEC+ reached a deadlock with Russia proposing an increase in production on grounds that demand has rebounded.

Market Commentary - January 4, 2021

Posted by Kevin Jock on Jan 4, 2021 4:40:51 AM

    Wall Street ends 2020 settling at record highs after a turbulent year which saw the Dow Jones lose as much as 38% between February and March. Following March lows, Nasdaq was among the better performers posting gains of 93% as investors shift focus from cyclical stocks to innovative stay-at-home tech firms set to benefit from a global virus pandemic. It is not all smooth sailing coming into 2021. With a newly elected U.S. President and Georgia’s 2 senate seat run-off at stake. The winner of the run-off will determine whether Republicans or Democrats take Senate majority, dictating economic policy for the next four years.

    Elsewhere, European and UK indices suffered consecutive days of declines amid a resilient virus and stricter measures set to devastate economies across continents. Alongside delaying the opening of schools, PM Boris Johnson is contemplating tightening restrictions. Meanwhile, Germany will extend national wide lockdown till end of January and France implemented a nightly curfew. The pace of vaccinations has been overly cautious, and nations are expected to pick up the pace in the new year.

    Mixed start to 2021 for Asia-Pacific indices. The Japanese Nikkei tumbled 640 index points intra-day following an announcement by PM Suga to start vaccinations by the end of February. The market was expecting the PM to declare a COVID-19 emergency in the coming days but only to be disappointed. Despite, delisting threats for Chinese oil companies on the New York Stock Exchange, the Hang Seng rose 310 points, whilst Australia climbed 78 points defying gloomy sentiment as Sydney imposed stricter social measures yesterday amid a 3rd wave outbreak. In an attempt to dampen the economic impact from the growing Australia – China trade war, PM Scott Morrison is moving to strengthen trade ties with smaller island in the Pacific Ocean in exchanging their neighbors with COVID-19 vaccines.

    The American greenback retains its downward trajectory in the new year as majors set break away to new multi-year highs. Gold breaches back above 1,900 in anticipation of higher inflationary pressure resulting from U.S. stimulus. Ahead of OPEC’s meeting today, crude oil rises for four consecutive days to $49 expecting a delay in raising output in February as surging coronavirus infections engulf developed economies.

    On the cryptocurrency front, bitcoin relentless soars to record highs of $34,782 during the holiday break. The 206% meteoric rise initially fueled by PayPal’s integration into their payment services back in October 2020, has seen the digital coin gain populous acceptance as a mainstream alternative payment method.

Market Commentary - December 31, 2020

Posted by Kevin Jock on Dec 31, 2020 3:23:23 AM

    Ahead of New Year’s Eve, global investors began winding down exposure as broad-based benchmarks ended in bear territory albeit with some stragglers on Wednesday. Wall Street was disappointed as Senate Majority Leader McConnell positioned the $2,000 stimulus payment alongside measures on election integrity and social media liability protections. The packaged deal addresses President Trump’s 3 most vocal demands whilst deterring Senators from both congressional sides in unanimously voting for the bill. The most likely outcome would leave the bill dead in the Senate floor.

    Despite positive momentum on the vaccination front and the U.K. parliament overwhelmingly voting in favour of the Brexit deal, the FTSE fell 80 index points with European counterparts following suit. Brits rejoiced following local approval of AstraZeneca’s COVID-19 vaccine whilst China’s President and European leaders met to finalise an EU-China investment agreement designed to promote post-pandemic economic recovery in bi-lateral trade. Elsewhere, on-going trade dispute between EU-US saw the out-going administration slap additional tariffs on European Union products including aircraft component and wine.

    Asia followed overnight U.S. sentiment posting declines in Australia whilst action in Hong Kong and Japan remained muted. Authorities in Sydney and Melbourne area struggling to battle COVID-19 clusters across both states after an initial outbreak on the Northern Beaches have now grown to 144 people.

    The U.S. dollar index settled at a 2 and a half year low yesterday. Since the pandemic began back in March, the year of 2020 saw investors shun the greenback as a Federal Reserve’s commitment to being super-accommodative and loose fiscal policy debase the currency. Meanwhile, gold surges towards $1,900, crude stays above $48 and bitcoin breaks all times highs again briefly touching 29,000.

Market Commentary - December 30, 2020

Posted by Kevin Jock on Dec 30, 2020 8:08:51 AM

    Market jitters return as Republicans block Democrats attempt to increase direct payments to households from $600 to $2,000. Defying the out-going President, Senate Majority Leader McConnell not only put the vote off, but also challenged Trump’s veto of the defense bill and pleaded towards his fellow Republicans to override his decision.

    Upon U.S. session open, Nasdaq held its ground whilst Wall Street across the board took a nosedive ending lower on Tuesday. President-elect Biden had criticised the current administration’s vaccination campaign as slow, vowing to get 100 million American’s vaccinated within 100 days of his presidency.

    Across the Atlantic, U.S contagion spread across European benchmark, of whom initially extended post-Brexit deal rallies only to lose all intra-day gains. Likewise, following Boxing Day, the FTSE had gapped up 1%, and surged as high as 2.6% only to end at 1.2% by session end.

    Asia opened mixed as Australia and Japan oscillated whilst Hang Seng surged to multi-month highs, up 1.7%. Panic selling in China’s tech sector after Beijing’s recent anti-trust probe spurred investors hunting for alternative value in Hong Kong.

    The U.S. dollar continues to slump shrugging off stimulus concern within the political arena. The Aussie dollar reached a 30-month high, the Turkish lira post 3 consecutive days of gain and China yuan’s just pips away from 6.5. Elsewhere, bitcoin rallies back up to 28,000 and crude settles around $48.

Market Commentary - December 29, 2020

Posted by Kevin Jock on Dec 29, 2020 5:21:30 AM

   US President Donald Trump decided to sign the massive $2.3 trillion coronavirus relief. Trump’s signature of the $900 billion coronavirus relief package extends unemployment benefits for millions of unemployment workers and independent contractors. The US dollar index fluctuated and fell. It was a quiet trading day on Monday as many investors were on vacation for Christmas and New Year. The US dollar index fell slightly to 90.30, a decrease of 0.06%. The intraday highest touched 90.38 and the lowest touched 89.98. Spot gold fluctuated after a sharp rise of 1.3%. Spot gold closed at US$1873.54, down US$5.71 or 0.30%. The lowest intraday touched US$1868.96 and the highest intraday US$1900.19.

   Due to the massive coronavirus relief and government spending bill with a total value of 2.3 trillion U.S. dollars, and the market is optimistic about economic recovery. The three major U.S. stock indexes continued to rise by 0.7%-0.9% after the Christmas holiday last night, setting record highs. The Dow once rose 325 points or 1.1% to 30,525. US stock futures continued to rise by 0.2%-0.3% across the board. The major stock markets in the Asia-Pacific region performed well in the early stage. The Nikkei and New York stocks continued to rise by more than 1% after the long holiday. They reached 29 and a half year highs and repeated record highs respectively. The former has reached 27,239 immediate market highs and surged 385 Point or 1.4%. Taiwan stocks have also repeatedly set record highs.

Cryptocurrency exchange Coinbase announced that as the U.S. Securities and Exchange Commission (SEC) sued the Ripple (XRP) issuer Ripple for an unregistered securities issuance of US$1.3 billion, it has imposed restrictions on the trading of Ripple and will start trading on January 19. Trading was completely suspended at 10 am on the same day. Coinbase has 35 million users in more than 100 countries and regions. The company has secretly applied to the SEC for listing. This will be the first major cryptocurrency exchange to be listed in the United States.

Market Commentary - December 28, 2020

Posted by Kevin Jock on Dec 28, 2020 4:48:48 AM

    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.

Market Commentary - December 24, 2020

Posted by Kevin Jock on Dec 24, 2020 6:03:22 AM

    Ahead of Christmas, European broad-based benchmarks outperformed American counterparts on Wednesday upon clear signs a Brexit trade deal is imminent. As negotiations come down to wire, the European Commission has said they’re now in the “final stages” after fine-tuning fishing right details. One last eleventh hour issue remains and that is trading rules for electric vehicles. Downing Street has requested U.K. electric cars to be tariff free if most of the components were outsourced beyond EU and UK territories.

    Across the Atlantic, U.S. households were left in limbo following Trumps refusal to sign the 900bn coronavirus relief deal. Some House Republicans have called the bill tainted and supported the White House proposal to increase stimulus checks from $600 to $2,000. With unemployment benefits set to expire the day after Christmas, congressional Republican party is scrambling to find a compromise. The uncertainty President Trump injected left Wall Street mixed. Nasdaq ended the session lower by 48 points whilst the Dow Jones outperformed by 171 points followed by the S&P500. Concerns have also risen over the pace in which vaccine doses have been disseminated. Millions of injections are still in storage and the goal of vaccinating 20 million people by December end is in doubt.

    Despite authorities in China launching an investigation on Alibaba’s monopolistic practices, the Hang Seng managed to etch out 0.3% intra-day. Elsewhere, disappointing performance from the S&P200 and the Japanese Nikkei had price in negative territory.

    The U.S. dollar resumed declines with the pound outperforming, surging as high as 213 pips amid increasing probability of a Brexit deal. Expectation beating GDP figures saw the Canadian Loonie reversed Tuesday’s losses in its entirety. Meanwhile, crude oil gains just over $1.10 over inventory drawdowns, gold steadies itself at $1,872 and bitcoin takes a breather, fluctuating between two major psychological round numbers. $23,000 – $24,000.

Market Commentary - December 23, 2020

Posted by Kevin Jock on Dec 23, 2020 5:26:18 AM

    Fresh jitters crept into Wall Street as out-going U.S. President Trump signalled he may not sign the congressionally approved 900bn COVID relief bill. A four-minute video posted on Twitter called the 5,600-page legislation a disgrace and that he would ask congress to amend the to “increase the ridiculously low $600 to $2,000 or $4,000 for a couple”. Both the S&P500 and Dow Jones edged lower by the end of session, whilst Nasdaq outperformed relatively as lingering concerns over the coronavirus variant had investors still favouring stay-at-home stocks.

    Meanwhile, defying daily infections hovering above the 30K mark, new tier 4 restrictions in south-east England and intensifying Brexit talks, the FTSE100 stabilised up 0.4% on Tuesday. Germany’s BioNTech alleviated concerns over the new strain suggesting existing vaccines are just as effective and if necessary, a new vaccine could be developed within 6-weeks. Despite prospects of negotiations continuing after Christmas, both Boris Johnson and Ursula von der Leyen stressed a desire to close a deal by Wednesday night. Fishing rights remain a key point of contention. Elsewhere, broader European indices outperformed settling near intra-day highs following Monday’s scare.

    Coming into Asia, choppy start for indices. The S&P200 gapped up 0.24% on open after finding support at 6,600, Hong Kong suffered a 0.37% gap down only to recover its entirety mid-session, while the Nikkei slipped following cumulative infections topping 200K and PM Suga’s reluctance to declare a state of emergency.

    Resurging fragments of uncertainty fuelled U.S. dollar demand across the board. As expected, frets over Brexit saw the euro and pound underperform amongst majors, with the former depreciating 0.6% whilst the latter down 0.8%. In the meantime, China’s central bank is anticipated to reduce the dollar’s influence against it’s yuan basket. Ahead of Bank of Thailand’s policy decision, the Thai Baht loses 1.4% in 2-days as rates are expected to stay at 0.5%. Crude oil slips another dollar to $46.62 as global restriction hamper petroleum demand. Whilst gold retreats, bitcoin surges closer to $24,000 on the back of unrelenting institutional demand.

Market Commentary - December 22, 2020

Posted by Kevin Jock on Dec 22, 2020 5:48:21 AM

   European markets and US market open in the heavy selloff on worries over a new strain of coronavirus found in the UK. Some other countries also have such cases, including Australia, Iceland, Italy, the Netherlands and Denmark.

   The WHO held a press conference for the new coronavirus. WHO said that countries have started virus sequencing to find cases infected with the new crown virus variant found in the UK. The current data reported by the United Kingdom shows that the spread of this new coronavirus variant has increased, with the transmission index rising from 1.1 to 1.5. The UK is determining how much of the impact comes from the virus itself and the differences in individual behavior after infection with this new virus.

   US crude oil drops sharply from around 49 to the lowest 46.1 during the day. following the risk aversion of the market. The new COVID-19 mutation and stricter lockdown the concern that more parts of the world may have renewed restrictions. US crude oil has increased for more than 30% since November as a sequence of vaccine breakthrough, but signs of stricter restrictions may lead to a decline of oil prices and weakening forward curve.

   The U.S. Congress began to consider more than US$900 billion to stimulate the economy, and the program was the first to be debated in the House of Representatives by 227 to 180 votes. The plan will include distributing US$600 to each American citizen and continuing to provide subsidies to the unemployed. At the same time, it will increase credit to SMEs by US$284 billion, and provide financial support to schools, airlines, transportation systems and vaccine distribution. The plan and the 1.4 trillion US dollar annual budget will be delivered for debate and voting. The review of the stimulus plan and the budget is expected to be the last item on the agenda before the end of the congressional term on January 3 next year.

Market Commentary - December 21, 2020

Posted by Kevin Jock on Dec 21, 2020 5:33:56 AM

    Mixed session in Asian trading with futures across Wall Street pointing lower as markets were spooked over emerging evidence revealing a new coronavirus strain sweeping across Europe and Australia. The new variant is said to spread more quickly and has been a factor in driving the recent surge in infection.

    In Asia, the S&P200 oscillated but remained unchanged, the Nikkei tumbling 1.7% and Hang Seng gapping lower 0.4% only to regain the entirely in later session. Currencies across the board against the U.S. dollar tumbled as risk appetite was sapped with more global lockdowns and restrictions on the horizon. The move was further exacerbated with investors fearing the incoming Treasury Secretary would favour a strong dollar policy after two predecessors, Larry Summers and Paul Hankson urged Janet Yellen to manage the greenbacks global dominance role more prudently.

    With focus on COVID, the much-anticipated stimulus reformed announced Monday morning failed to buoy investor sentiment. Whilst the Japanese parliament signed on a record 106.6 trn yen annual budget for 2021 boosting military and welfare expenditure. Congressional leaders in the U.S have reached a $900bn relief package after multiple rounds of negotiations in past weeks. Hard-hit households would receive a one-off $600 check in addition to another $300 per week in unemployment benefits. COVID liability shield remains a point of contention and thus was excluded.

    Last Friday saw European and UK benchmarks weaker as Brexit negotiations drag on. A draft deal had been anticipated before January 1st, however progress thus far suggest talks will now continue past Christmas. The previously resolved fishing matters have returned to the forefront with negotiator arguing over EU boat rights in UK waters and the length of the transition period.

    Elsewhere, crude oil slips below $48 with demand recovery now in doubt. Gold and bitcoin continue to make significant gains, more so the latter asset. The cryptocurrency gained 32% last week as more prominent investors publicly embraced the digital coin. This morning the crypto gained another $1,000 on the back of Elon Musk’s twit pondering converting part of Tesla’s balance sheet into Bitcoin.

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