Market Commentary – April 8, 2021

Kevin Jock

8th April 2021

    Wall Street poised to benefit from a two-prong support between fiscal and monetary stimulus as the S&P500 and Nasdaq continues to edge higher. In a White House speech on Wednesday, President Biden promoted his $2.25tn infrastructure plan as a counter against China’s increasing dominance on the global table with resistance from Republicans over planned tax hikes. Meanwhile FOMC meeting minutes reveal in the face of upgraded growth and employment projections, the central bank will remain dovish until in 2023, keeping the $120bn asset purchase program per month unchanged.

    Following reviews by the U.K. and E.U. health regulators, a link between AstraZeneca’s vaccine and blood clots has now been formally determined. Findings complicate an already underwhelming vaccination program, as the most likely response would be to suspend the shot, slowing down schedules even more. News weighed by European benchmarks as many remained unchanged. In contrast, Brits are gearing up for life after lockdown with the FTSE100 gaining 1.1%.

    Whilst the S&P200 and Hang Seng rallied on Asia open, the Nikkei slipped as Osaka declared a state of emergency yesterday after daily infections hit a high of 878. The services industry in Japan continue to take the brunt of COVID-19.

    The U.S. dollar gained across the board as elevated treasury yields remain a juicy prospect. Crude finds support at $59, gold closes at $1,737 and bitcoin falls $2,000 to $56,000 following concerns that China could use the cryptocurrency to undermine the U.S. The theory depicts China’s preference for two global reserve currencies as opposed to just the American greenback. China’s attempt to raise the yuan into that role has thus far failed, however the global acceptance of bitcoin may fill that role.


Figure 1 (Source: IS Prime) UK100 Daily : Gearing up to be released from lockdown, the FTSE100 advances towards a near-term high.

Headliner to Review

  • The US trade deficit in international goods and services in February this year further expanded by 4.8% to 71.078 billion U.S. dollars (previous trade deficit was slightly revised down to 67.823 billion U.S. dollars), a record high and also exceeded market expectations for a trade deficit of 70.5 billion U.S. dollars.
  • The Purchasing Managers Index (PMI) for the service industry in the UK in March this year was unexpectedly increased from the previous value of 49.5 to 56.3, which was the first expansion since October last year. The market originally expected to increase to 56.8.
  • The Purchasing Managers Index (PMI) of the Eurozone service industry in March this year was unexpectedly increased from 45.7 to 49.6. The rate of decline was the slowest in seven consecutive months of contraction, mainly benefiting from the service industry activities in Germany and Ireland. A relatively high level of support was recorded, and the market originally expected to increase to 48.8.

Headliner to Watch

  • US unemployment claims expected to improve from 719k to 682k as overall confidence increase fuelled by stimulus and vaccinations.
  • The ECB will release their meeting minutes today. In the actual meeting on March 11th, the central bank had pledged to accelerate bond purchases.
  • Fed Chair Powell will participate in an online panel discussion about the Global Economy hosted by the IMF.

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Antony Tan
Ben Li
Kevin Jock