Market Commentary – December 30, 2020

Kevin Jock

30th December 2020

    Market jitters return as Republicans block Democrats attempt to increase direct payments to households from $600 to $2,000. Defying the out-going President, Senate Majority Leader McConnell not only put the vote off, but also challenged Trump’s veto of the defense bill and pleaded towards his fellow Republicans to override his decision.

    Upon U.S. session open, Nasdaq held its ground whilst Wall Street across the board took a nosedive ending lower on Tuesday. President-elect Biden had criticised the current administration’s vaccination campaign as slow, vowing to get 100 million American’s vaccinated within 100 days of his presidency.

    Across the Atlantic, U.S contagion spread across European benchmark, of whom initially extended post-Brexit deal rallies only to lose all intra-day gains. Likewise, following Boxing Day, the FTSE had gapped up 1%, and surged as high as 2.6% only to end at 1.2% by session end.

    Asia opened mixed as Australia and Japan oscillated whilst Hang Seng surged to multi-month highs, up 1.7%. Panic selling in China’s tech sector after Beijing’s recent anti-trust probe spurred investors hunting for alternative value in Hong Kong.

    The U.S. dollar continues to slump shrugging off stimulus concern within the political arena. The Aussie dollar reached a 30-month high, the Turkish lira post 3 consecutive days of gain and China yuan’s just pips away from 6.5. Elsewhere, bitcoin rallies back up to 28,000 and crude settles around $48.


Figure 1 (Source: IS Prime): Bitcoin 5-Minute (29th – 30th Dec) : Bitcoin rallies back towards all-time highs following a strong bounce off from the 26,000 level

Headliner to Review

  • S&P/Case-Shiller Composite-20 HPI y/y increased from 6.6% to 7.9%, which was better than the expectation 7.0%. The figure reflects changes in the value of the residential housing in 20 US major metropolitan areas in the given month compared to the same month of the previous year.
  • The Fed has extended the end date of the Main Street Lending Program from 31, December to 8, January next year to allow more time to process and approve applications on or before December 14 loan.
  • The “Main Street Lending Program” is to support small and medium-sized enterprises in trouble due to the pandemic. Since the program was launched in the summer, the response has not been well. However, since the Ministry of Finance announced the end of the plan last month, the number of companies that have submitted applications has increased sharply. As of December 23, the total amount of loans applied for was 14.59 billion US dollars, which was more than double the amount in early December.

Headliner to Watch

  • Spain’s flash CPI expected to remain in deflationary territory at -0.6% whilst European’s await inoculation to fight COVID.
  • Crude oil inventories to deepen in deficit from -0.6M to -1.7M largely from a combination of demand recovery in China and continued production cuts from OPEC
  • China’s manufacturing and services PMI anticipated to remain relatively unchanged and in expansionary territory.

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Antony Tan
Ben Li
Kevin Jock