Market Commentary – December 22, 2021

Kevin Jock

22nd December 2021

Global stocks rebounded on Tuesday, although investors remained on edge over the prospect of fresh travel restrictions to combat the fast-spreading Omicron variant. The blue-chip S&P 500 index gained nearly 1.8%, clawing back the entirety of its losses on Monday, while the Nasdaq index rose 2.4%. According to the Centers for Disease Control and Prevention, the Omicron variant is now dominant in the U.S., accounting for 73% of sequenced cases, up from 13% in the previous week.

European shares ended higher on Tuesday, recovering Monday’s losses, with a jump in commodity-linked and travel stocks offsetting concerns about the spread of the virus variant. London’s FTSE 100, Germany’s DAX and France’s CAC 40 all advanced by nearly 1.4%.

Japanese shares struggled for direction on Wednesday, as a rally in chip and other tech-related stocks following a strong Wall Street session overnight offset weakness in Toyota and its group companies, and retailers including Uniqlo-owner Fast Retailing. The Nikkei 225 index remained almost flat at the mid-day close. Meanwhile, China shares rose slightly, led by automobile and tech stocks after a senior state planner assured the world’s second largest economy would be able to keep growth stable. The blue-chip CSI300 index was up 0.08% at the mid-day.

Oil price also rebounded, with the Brent crude gained over 3% to settle at $74.26 a barrel in yesterday. Price of Bitcoin rose too, extends the recovery and currently trading close to $49,000 against the dollar. In Turkey, the lira jumped sharply after President Erdogan unveiled a new saving scheme that analysts described as a backdoor interest rate rise that could erode the public finances, with the currency rose more than 40% to trade at TL12.39 against the dollar on Tuesday.

image_2021_12_22T06_19_09_525Z

Figure 1 (Source: IS Prime) USDCNH Daily : The Chinese Yuan has been a surprise winner in 2021, making steady gains against the greenback even as China’s economy falters.

Headliner to Review

  • Minutes of the Reserve Bank of Australia (RBA)’s December 7 policy meeting showed its Board remained committed to keep interest rates at a super-low 0.1% but was considering how and when to wind up it’s A$4bn in weekly bond buying given the economic pickup.
  • Canadian retail sales surged for a second consecutive month in November, as consumers continue to lead the nation’s recovery, with the figures jumped by 1.6%.

Headliner to Watch

  • Canadian GDP for October (Dec 23rd) had been guided toward a rise of 0.8% m/m by Statistics Canada.
  • U.S. core durable goods orders figures are expected to rise by 0.6%. Key here will be whether the streak of 8 consecutive months of increase could be kept alive.

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Authors:
Antony Tan
Kerry Man