Market Commentary – April 6, 2021

Kevin Jock

6th April 2021

    Weak start to Asia session with most benchmarks slipping on open. Though Australia’s S&P200 gapped up 1% following Easter break, the index has retreated half a percentage point thus far during intra-day trading. Nonetheless, as the Australia government announces a travel corridor with New Zealand, the tourism industry is one step closer towards their long-awaited recovery.

    Dismal household expenditure data led the Japanese Nikkei lower, giving up gains from the previous 2 trading days. Trade risk abounds with China as Japanese Prime Minister Suga meets with President Biden later in April. China’s foreign minister has publicly warned Japan to stay “objective and rational” on matters pertaining to Hong Kong and Xinjiang.

    Wall Street continues to soar higher on exceptional ISM services PMI data despite a hike in corporate taxes proposed by President Biden last week and a global minimum tax on foreign profits outlined by Treasury Secretary Yellen yesterday. Biden’s plan would see corporate tax rates rise from 21% to 28% alongside a 21% global minimum tax to target tax havens.

    European and UK markets remained closed on Monday whilst UK Prime Minister Boris Johnson announced easing to lockdown measures starting April 12th.

    The U.S. dollar slumped against majors as Janet Yellen’s swatted away concerns for inflation and reassured investors yields will continue to remain low in the medium term. Meanwhile, crude declines $2.50 to just below $59 on the prospect of greater global supply from Iran once U.S. eases sanctions. Gold’s currently at $1,735 and bitcoin below $59,000.


Figure 1 (Source: IS Prime) S&P500 Daily : Consecutive days of all-time highs for the S&P500 as recent economic data illustrates the U.S. has built a solid foundation for economic growth in 2021.

Headliner to Review

  • Business activities in the US service industry are expanding at a record rate. The ISM services purchasing managers index (ISM services PMI) rose to a record high of 63.7 from 55.3 in February. The data also greatly exceeded market expectations of 58.5.
  • Further details of the report showed that the business activity index improved from 55.5 to 69.4, and the employment index rose from 52.7 to 57.2, which is the highest level since May 2019. Finally, the house price payment index reached 74 points, the highest point since July 2008.
  • British Prime Minister Boris Johnson stated that the United Kingdom will continue to relax the lockdown from April 12, and the United Kingdom will reopen shops, restaurants and bars, barber shops, zoos and gymnasiums, and provide outdoor dining services. He also added that it is too early to say whether an international summer vacation will be launched this year.
  • As expected, no changes to the cash rate by the RBA and a dovish stance to remain until 2024 as the central bank does not jobs nor inflation to reach targets till then.

Headliner to Watch

  • Unemployment rate in Europe steadies at 8.1% unchanged from previous month. Slow vaccinations continue to hamper economic recovery.
  • The IMF will release their global outlook report on Tuesday. Anticipated divergent recoveries across varying economies and their role as lender of last resort for suffering countries.

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Antony Tan
Ben Li
Kevin Jock