Market Commentary – April 1, 2021

Kevin Jock

1st April 2021

    President Biden unveils a $2.25tn infrastructure plan tagged “American Jobs Plan” with Nasdaq welcoming the news upon arrival surging 1.6%, though surprisingly Dow Jones underperformed slipping lower. The eight-year program includes 650bn in economic initiatives like clean water and high-speed broadband, 620bn for transportation and 580bn for manufacturing. Republican opposition is fierce as the administration intends to pay for spending via tax increases. Meanwhile, Archegos Capital’s fallout has now amassed to $30bn being liquidated as Credit Suisse and Nomura brace for profit warnings and price-target downgrades by competitors.

    Most European indices ended Wednesday’s session flat with investor sentiment weighed down by prevailing slow vaccine rollout and inconsistent policies. French CAC an outlier, closing in the red following President Emmanuel Macron announcing an extension to lockdown measures for four weeks ahead of Easter holiday. Though, on a positive note, both Pfizer and BioNtech released statistics suggesting their vaccines have a 100% efficacy rate for adolescents between age 12 – 15.

    Coming into Asia, benchmarks cautiously drift upwards. Over 50 Hong Kong listed companies had their trading suspended as they either failed to report annual results or failed to provide sufficient filings by 31st March. Compare to last where only 9 companies were hit with trading halts.

    Oil post consecutive days of declines ahead of OPEC-JMMC’s meeting today. Pre-meeting documents reveal a downward revision of global oil demand from 5.9 million bpd to 5.6 million bpd. Panel members noted that despite the acceleration in global vaccine jabs, the frequent waves of coronavirus infection persist, leading to lockdown measures and restrictions which ultimately will affect economic growth.

    The dollar index retreats slightly, gold rebounds back to $1,707 alongside bitcoin of which is teetering below $60,000.


Figure 1 (Source: IS Prime) XAUSUD Daily : Gold find support on a historically active level $1,700 after Biden’s stimulus plan announcement

Headliner to Review

  • ADP Non-farm employment change came in weaker than expected at 517k compared to forecast 522k, but nonetheless was a substantial acceleration compared to last months 176k. Business confidence is growing following President Biden’s 100-day vaccination plan as well as from the recently legislated pandemic recovery relief.
  • Month on month GDP figures came in higher than consensus at 0.7% vs 0.5%. Economic activity is picking up pace alongside global recovery.
  • Flash CPI estimates disappointed failing to meet forecast of 1.4% vs actual 1.3%. Lockdowns across member states continue to impact growth negative in the region and until lifted will affect inflation.
  • Aussie retail contracted less than expected at -0.8% vs -1.1%. Expiration of government job subsidies in March affected consumer sentiment.

Headliner to Watch

  • OPEC members and allied states will deliberate on their monthly output meeting today. All signs’ points to an unlikely increase in output quotas as COVID-19 persist.
  • US ISM manufacturing PMI anticipated to increase to its highest level since 2004.

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Antony Tan
Ben Li
Kevin Jock