Market Commentary – December 9, 2020

Kevin Jock

9th December 2020

    Alongside Wall Street breaking into new highs, global indices across the board posted positive gains on Tuesday unphased by stalling U.S. stimulus and Brexit talks which continues to overshadow general sentiment.

    Nevertheless, the world’s first approved coronavirus vaccination kept investor morale high. On Tuesday, thousands of elderly Brits were recipients of Pfizer/BioNTech vaccine outside clinical trials. American’s are also expected their first dose within 10 days as regulators grant emergency approval.

    Despite Democrats compromising a multi-trillion-dollar package for a 908bn deal, Senate Majority Leader McConnell has refused to endorse the bipartisan proposal but instead opted for his own 916bn plan. The major different lies in protection for businesses against COVID-19 related lawsuits.

    Though investors were caught off guard from last Sunday’s sudden deterioration in negotiations. The pound steadies around 1.34, with intra-day volatility remaining high. Meanwhile, the FTSE up 0.8% ahead of U.K. PM Boris Johnson meeting ECP Ursula von der Leyen in Brussels today for last ditch effort. European benchmarks also followed suite in anticipation of a Brexit deal.

    Markets across Asia-Pacific rallied on open with Australia extending gains to a new 9-month high. Exceptional machinery orders saw the Japanese Nikkei elevate 310 points whilst Hong Kong reversed Tuesday’s losses by 0.78%.

    The U.S. dollar index steadied just below 91 resulting from lacklustre macroeconomic news. Elsewhere, gold continued its hot streak closing above 1,870 whilst bitcoin fell below 19,000.


Figure 1 (Source: IS Prime): AUS200 daily: Investors anticipate a return to normalcy with the AUS200 hitting 9-month high as the first vaccine gets administered in the U.K.

Headliner to Review

  • In Europe, Final Employment Change q/q increased from 0.9% to 1.0%. Revised GDP q/q dropped slightly from 12.6% to 12.5%. The figures meet the expectation.
  • ZEW Economic Sentiment in Europe jumped from 32.8 to 54,4, which was much better than the expectation of 54.4. German ZEW Economic Sentiment jumped to 55.0 from 39.0 last month, compared with the estimation of 45.5. The investor confidence soared, exceeding expectations, as it is expected that the coronavirus vaccine would boost the economy of Europe.
  • In US, Revised Nonfarm Productivity q/q dropped from 4.9% to 4.6%, where the market was expected increase 4.9%. During the period, the Revised Unit Labor Costs q/q unexpectedly increased from -8.9% to -6.6%, which was the first decline since the first quarter of 2019. The market had expected that it fell by 8.9%.
  • IBD/TIPP Economic Optimism in US dropped from 50.0 to 49.0. The reading below 50.0 indicates pessimism on consumer confidence. With COVID-19 numbers climbing rapidly, jobs report and economic figures are weaker than expected.

Headliner to Watch

  • In focus today, the BOC’s overnight rate decision. The central bank is expected to communicate an extremely accommodative policy with an unlikely prospect of micro cuts under 25 basis points.

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Antony Tan
Ben Li
Kevin Jock