Market Commentary – December 20, 2021

Kevin Jock

20th December 2021

U.S. stocks slid on Friday at the end of a week in which several big central banks confirmed the threat posed by high inflation and the Omicron variant. The benchmark S&P 500 fell 1%, taking its losses after a volatile five trading sessions to 1.9%. The Nasdaq index whipsawed after enduring its worst trading day since late September on Thursday, ending the trading day marginally lower.

European equities fell with banks and luxury stocks led the declines on Friday, with the EURO STOXX 50 index dipped by 0.96%. Meanwhile on Saturday, the Dutch government announced a strict Christmas lockdown that would see everything but essential stores close amid fears over the spread of the virus.

In Asia, Japanese shares fell on Monday, tracking Wall Street’s weak finish over the weekend, with the Nikkei 225 dropped 1.72% before the mid-day close. China stocks fell as well after a rate cut of the lending benchmark which has failed to boost investor sentiment. HK shares extended loses to a 20-month low, with tech giants, healthcare firms and mainland property developers down between 2.4% and 3%.

Oil prices slid 2% on Monday as growing number of cases of the virus variant in Europe and the U.S. caused investor worries that new restrictions on businesses may hit fuel demand. Price of Brent crude fell to $71.33 per barrel during the Asia morning session. Turkey’s main stock exchange halted trading on Friday after the country’s currency crisis, already hitting bonds and spread to equities. The lira dropped further 7% to a fresh all-time low of more than 17 to the US dollar.

image_2021_12_20T06_17_04_404Z

Figure 1 (Source: IS Prime) IDX.UK.100 Daily : Pessimism rife among Hong Kong investors as the blue-chip benchmark falls below 23,000 for the first time since May 2020 as outlook worsens with Omicron loose.

Headliner to Review

  • The Bank of Japan (BoJ) on Friday dialed back emergency pandemic funding but maintained ultra-loose policy and extended financial relief for small firms, cementing expectations it will remain among the most dovish central banks for the foreseeable future.
  • The German ifo Business Climate index dropped for the sixth month in a row in December, coming in at 94.7, from 96.5 in November, which suggests that the economy has come to a standstill at the turn of the year.

Headliner to Watch

  • The Canadian core retail sales figure is due to release on Tuesday, forecasted to jump by 1.7% compared to a decrease of 0.2% from the previous month.

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Authors:
Antony Tan
Kerry Man