Market Commentary – April 23, 2021

Kevin Jock

23rd April 2021

    President Biden’s plans to introduce a capital gains tax of 43.4%, essentially doubling of existing rates, for those earning $1 million or more jarred Wall Street as major benchmarks tumbled lower. Nasdaq down 0.9%, Dow Jones lost 0.7% and the S&P500 slipped 0.6%. The plan comes amid the administration’s fiscal splurge to ensure the American recovery stays on track and would also reverse some of the tax cuts previously passed by President Trump in 2017. UK and European markets were subdued after the ECB left monetary policy unchanged offset U.S. contagion.

    In Asia, indices brushed off overnight sentiment to rally on open. Despite Hong Kong and Singapore calling off a planned air-travel bubble planned for Thursday, the Hang Seng rose 1.1% intraday. The postponement was triggered following an outbreak among Singapore’s migrant worker community. The Nikkei edged higher amid the government plans to implement a “short and powerful” state of emergency for big cities, just 3 months out from the Olympics. Daily cases in Japan has spiked to over 5,000 just yesterday.

    Risk-off appetite saw the U.S. dollar gain among majors. Gold set to record their 3rd consecutive weeks of gains, currently at $1,780 whilst palladium retreated from all-time highs to settle at $2,828 as a tight supply situation pushed prices higher. Improving gasoline demand in the U.S. saw oil prices gain. This despite the COVID pandemic in India and Brazil reach crisis levels.

    Bitcoin continues to receive a beatdown as it declines below $49,000 after just hitting $64,900 two weeks ago. A raft of potential regulatory reform in the U.S. from money laundering legislation to a capital gains hike has fuelled the outflow. Nonetheless, the crypto asset remains as one of the best performers for the past year, sitting on 625% gains.


Figure 1 (Source: IS Prime) Palladium Daily : Recent supply concerns has XPDUSD surging beyond historic all-time highs after flooding in Russia’s world’s largest mine affected production abilities.

Headliner to Review

  • Unemployment claims figures in the U.S. defy expectations and fell from 586k to 547k whilst consensus was a rise to 607k. Lowering COVID cases and easing restrictions has revised business expectations to hire more ahead of a return to normality.
  • As expected, the ECB left both rates and the quantity of bond purchases unchanged with President Lagarde saying discussions of tapering are still premature as near term outlook is clouded amid vaccine distribution concerns and a global resurgence in cases.

Headliner to Watch

  • A plethora of services and manufacturing PMI out of Europe today with the overall bloc anticipating a slight decline.
    • Flash Manufacturing PMI set to decline from 62.5 to 62.0
    • Flash Services PMI set to decline from 49.6 to 49.1
  • Meanwhile, both services and manufacturing are expected to increase in the U.K. and U.S.
  • Retail sales in the U.K. anticipated for the second consecutive monthly growth at 1.5% after lockdown easing.

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Antony Tan
Ben Li
Kevin Jock