Market Commentary – December 8, 2020

Kevin Jock

8th December 2020

    Among global benchmarks, Nasdaq outperformed as investors retreated to tech firms benefiting from COVID-19’s continual surge. Despite promising headway yesterday in breaking congressional deadlock on a $908bn stimulus proposal, both S&P500 and Dow failed to keep record-breaking momentum slipping 0.27% and 0.54% respectively. Wall Street was further weighed down on reports that U.S. officials passed up a chance to secure more vaccine shots from Pfizer in favour of diversifying agreements with Moderna, AstraZeneca and Johnson and Johnson. The current Pfizer deal is enough for only 50 million Americans among a 328 million population.

    Though the pound regained loss ground from Monday’s intraday tumble following Prime Minister Johnson signalling his willingness to walk away on threats to break Brexit’s divorce agreement. Euro-zone benchmarks still fell on on-going Brexit woes and rising risk from U.S. – China tensions. Subsequently after Monday’s deadlocked negotiations, the U.K. PM is expected to travel to Brussels to meet with EU leaders for a make-or-break talk.


Figure 1 (Source: IS Prime): Nasdaq Weekly: Nasdaq settles at all-time highs on the back of a persevering virus outbreak.

    A mixed open for Asia-Pacific indices with the S&P200 rallying 40 points on the back of metals and miners. Since China’s economic rebound, Australia has greatly benefited with the metals and mining index up 18% since November. The Japanese Nikkei also recovered 175 points after PM Suga unveiled a 40tn yen recovery package. Meanwhile, Hong Kong declines two consecutive days as Chief Executive Carrie Lam bans night dining, gyms and other social settings.

    Risk-off appetite saw a return to the American greenback across the board. Elsewhere oil retreats below $46 on COVID concerns whilst gold ends the past 4 out of 5 days in positive territory.

Headliner to Review

  • In Japan, Final GDP q/q increased from 5.0% to 5.3%. Final GDP Price Index y/y increased from 1.1% to 1.2%. manufacturing sentiment index improved for the sixth consecutive month from an 11-year low, from the previous value of minus 13 to minus 9, a 10-month high, but it has been in the negative region for 17 consecutive months.
  • In the United States, the monthly growth rate of consumer credit slowed down to 7.2 billion US dollars in October, compared with the previous value of 15.0 billion US dollars. It was far less than market expectations for an increase of 17.6 billion US dollars.
  • In Canada, Ivey PMI dropped from 54.5 to 52.7, which was better than the expectation of 52.3.
  • In Australia, NAB Business Confidence jumped from 3 to 12 in November while business conditions rose from 7 points to 9 points. Business confidence and conditions have reached pre-pandemic heights during November.

Headliner to Watch

  • Europe’s ZEW economic sentiment is expected to snap October and November declines with a rise from 32.8 to 37.5. After a month of restrictive social measures, recent vaccine breakthroughs and rounding infection curves uplifted European mood.
  • For the first time since the GFC, China’s CPI is expected to decline to 0 from 0.5%. The PPI will remain in negative territory at -1.8%.

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Antony Tan
Ben Li
Kevin Jock