Market Commentary – April 2, 2021

Kevin Jock

2nd April 2021

    S&P500 surpasses 4,000 for the first time in history as investors digest President Bidens’ 2.25tn stimulus plan. Tech continues to react overwhelmingly climbing another 1.5%, eyeing the large, proposed investments in R&D and broadband infrastructure upgrades. Meanwhile, downward revisions in medium term inflation tempered advances in treasury yields with the 10-year note stabilizing below 1.7%.

    European benchmarks followed global sentiment higher as the French CAC and German DAX settle at historic highs. Slow vaccinations and a resurgent 3rd wave remain a visible headwind ahead alongside reactionary lockdown measures weighing down economic growth. Despite this, manufacturing data out Thursday saw activity almost rebound back to pre-pandemic levels.

    Barring Japan, Australia and Hong Kong markets are shut for Easter holidays. The Nikkei climbed over 200 index points intra-day after Q1 business sentiment rebounded in spite of the state of emergency during the period.

    The dollar index weakened, however of particular interest is the Turkish Lira. The currency surged 1.7% after the newly appointed central bank Governor Sahap Kavcioglu reassured investors to keep a hawkish stance on monetary policy to stem inflation risk. Gold rose $22 to $1,730 and bitcoin at $59,500.

    Bucking consensus, OPEC has agreed to gradually increase oil production by 2 million bpd from May to June. Pre-meeting, expectations was that member states and allies remain cautious, however post meeting notes revealed growing confidence in the current global recovery. Saudi’s Energy Minister said “Even in those sectors that were badly hit such as airline travel, there are signs of meaningful improvement”.


Figure 1 (Source: IS Prime) S&P 500 : S&P500 confidently settles above 4,000 ahead of Easter break. All it took was $2.25tn.

Headliner to Review

  • According to IHS Markit/BME data, the German Manufacturing Purchasing Manager Index (PMI) in March this year confirmed a record high, from the previous value of 60.7 to 66.6, the highest since 1996.
  • The UK Manufacturing Purchasing Managers Index (PMI) in March this year unexpectedly revised up to a 121-month high, rising from the previous value of 55.1 to 58.9, the highest since February 2011. The market originally expected to increase to 57.9.
  • The Eurozone Manufacturing Purchasing Managers’ Index (PMI) was unexpectedly revised up after the seasonal adjustment in March this year, from the previous value of 57.9 to 62.5, the highest since the record in June 1997. It has been expanding for 9 consecutive months. The market originally expected to increase to 62.4.
  • ISM Manufacturing PMI in US increased from 60.8 to 64.7, which was much higher than the expectations of 61.5. This figure indicates expansion in the overall economy for the 10th month in a row after contraction in April.

Headliner to Watch

  • US labour markets are expected to show a drastic improvement with an anticipated 652k more non-farm jobs added and a jobless rate of 6%. Since being elected into office President Biden has made significant efforts to shore up not only fiscal support but also strived immunize the public from COVID-19 paving the way for a strong economic recovery.

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Antony Tan
Ben Li
Kevin Jock