Market Commentary – December 21, 2021

Kevin Jock

22nd December 2021

U.S. equity markets are sinking on worries new restrictions aimed at fighting the spread of the omicron variant will hinder the economic recovery and fuel more inflation. The Dow is down over 400 points, and the S&P 500 and Nasdaq are falling more than 1%. Meanwhile, U.S. growth prospects were dealt a blow after Democratic senator Joe Manchin announced he would not support President Biden’s over $1.7 trillion Build Back Better social spending plan. Manchin’s vote is considered essential for the proposal to pass.

European stocks ended lower on Monday due to a wider sell-off. London’s FTSE 100 slid 1%, CAC 40 dropped 0.82% and DAX declined 1.88%. Britain may impose new restrictions to slow the spread of the virus variant after Christmas, which is a day after the Netherlands began a fourth lockdown and as other European nations consider putting a squeeze on Christmas.

Elsewhere in Asia, Australian shares rose on Tuesday by their most in two weeks, with the ASX 200 index closed up by 0.86%. China and HK stocks rose on Tuesday as well, with real estate stocks extended their rebound. However, its video and live-streaming platforms listed in HK dropped, after Beijing fined Internet celebrity Viya for tax evasion, with a fine of 1.34bn CNY.

Oil posted its worst single day rout this month on growing concerns over the rapid spread of the virus variant, closed at $69.3 a barrel in yesterday. Gold price edged down as well, to $1790.87 per ounce. The Turkish lira plummet on Monday after President Erdogan rejected warnings from business due to the dangers of recent interest rate cuts, in which it fell to a new record low of 18.33 against the dollar. It later rallied to close at 13.11 after Erdogan announced a scheme aimed at encouraging the country’s savers.

image_2021_12_21T07_22_18_814Z

Figure 1 (Source: IS Prime) USDTRY Daily : Chaotic movements on the Turkish lira as the currency reaches a new record low then whips back to strengthen dramatically against the dollar.

Headliner to Review

  • UK manufacturing output growth in the quarter to December accelerated to its fastest pace since July, according to the latest monthly CBI Industrial Trends Survey, with order volume increased by 24% from November.

Headliner to Watch

  • US final quarter GDP is due to release on Wednesday, expected to increase by 2.1%.
  • US Existing Home Sales figure is also expected to increase by 6.55M, from 6.34M in last month.

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Authors:
Antony Tan
Kerry Man