Market Commentary – December 22, 2020

Kevin Jock

22nd December 2020

   European markets and US market open in the heavy selloff on worries over a new strain of coronavirus found in the UK. Some other countries also have such cases, including Australia, Iceland, Italy, the Netherlands and Denmark.

   The WHO held a press conference for the new coronavirus. WHO said that countries have started virus sequencing to find cases infected with the new crown virus variant found in the UK. The current data reported by the United Kingdom shows that the spread of this new coronavirus variant has increased, with the transmission index rising from 1.1 to 1.5. The UK is determining how much of the impact comes from the virus itself and the differences in individual behavior after infection with this new virus.

   US crude oil drops sharply from around 49 to the lowest 46.1 during the day. following the risk aversion of the market. The new COVID-19 mutation and stricter lockdown the concern that more parts of the world may have renewed restrictions. US crude oil has increased for more than 30% since November as a sequence of vaccine breakthrough, but signs of stricter restrictions may lead to a decline of oil prices and weakening forward curve.


   The U.S. Congress began to consider more than US$900 billion to stimulate the economy, and the program was the first to be debated in the House of Representatives by 227 to 180 votes. The plan will include distributing US$600 to each American citizen and continuing to provide subsidies to the unemployed. At the same time, it will increase credit to SMEs by US$284 billion, and provide financial support to schools, airlines, transportation systems and vaccine distribution. The plan and the 1.4 trillion US dollar annual budget will be delivered for debate and voting. The review of the stimulus plan and the budget is expected to be the last item on the agenda before the end of the congressional term on January 3 next year.

Figure 1 (Source: IS Prime): US Oil 1-Year Chart


Headliner to Review

  • CBI Realized Sales in UK jumped from -25 to -3, which was still worse than the expectation 3.

  • Consumer Confidence in Europe increased slightly from -18 to -14, which was better than the forecast -18.

  • Retail Sales m/m in Australia jumped from 1.4% to 7.0%, which was much better than the forecast 2.1%.

Headliner to Watch

  • In US, Final GDP q/q and Final GDP Price Index q/q expected to remain unchanged at 33.1 and 3.6%. CB Consumer Confidence expected to increase from 96.1 to 97.1.  

  • Existing Home Sales expected to drop to 6.85 million to 6.7 million.

  • In UK, Final GDP q/q and Revised Business Investment q/q expected to remain unchanged at 15.5% and 8.8%. Public Sector Net Borrowing expected to increase from 21.6 billion to 26.3 billion.

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Antony Tan
Ben Li
Kevin Jock