Market Commentary – December 3, 2021

Kevin Jock

3rd December 2021

Global stock markets experienced volatile trading on Thursday with U.S. equities rebounded after a sharp drop late on Wednesday, as the S&P 500 rose 1.42%, led by economically sensitive sectors such as banks and industrial companies, while the Dow rose 1.82%. The Vix index traded at 28 on Thursday, above its historic average of about 20 which signals that short-term risks to markets have increased.

European shares fell more than 1% on Thursday, as countries enforced restrictions to curb the spread of the virus. Euro STOXX 50 index declined by 1.7%, while DAX dropped 1.35% as well when the German government agreed on new COVID-19 restrictions on Thursday that focused on the unvaccinated citizens. Travel and leisure shares, which suffer the most from movement curbs, fell 2.6%, bringing losses this year to 7%.

Australian shares gained some ground on Friday, as the initial shock of the virus variant diminished, and the market looked to regain some of its losses from earlier in the week when the new variant cases were reported in the country. The benchmark ASX 200 up by nearly 0.33% during the Asian morning session. HK’s Hang Seng index edged lower before the mid-day close, down by 0.74% to 23,612.43 points.

In terms of oil, the move by Opec+ members to increase crude supply next year by 400K barrels has surprised investors. Brent crude initially fell sharply to $66.65 but later on recovered its losses to close at $71.39 a barrel in yesterday. Bitcoin price remained pretty much sidelined at $56.5K, while gold trading in a narrow range bound at $1772 per ounce.

image_2021_12_03T05_24_41_961Z

Figure 1 (Source: IS Prime) IDX.EU.50 Daily : Bumpy ride for the Euro STOXX 50, falling sharply amid the news of Omnicron and potential nation wide lock downs across Europe.

Headliner to Review

  • In the week ending November 27, the advance figure for US seasonally adjusted initial claims was 222K, an increase of 28K from the previous week’s revised level.
  • OPEC and its allies agreed on Thursday to stick to their existing policy of monthly oil output increase by 400K barrels per day, despite fears that a US release from crude reserves and the new virus variant would lead to a new oil price rout.

Headliner to Watch

  • US Treasury FX Report is due to announce on Saturday. It is estimated that Switzerland, Vietnam, Taiwan and Malaysia all met the three criteria set by the US Treasury to be labelled as FX manipulators.

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Authors:
Antony Tan
Kerry Man