Market Commentary – February 15, 2021

Kevin Jock

15th February 2021

    Despite bank holidays in China and U.S. as they celebrate Lunar New Year and President’s day respectively, Australia’s S&P200 continued Friday’s overnight U.S. momentum surging as high as 0.8% on open. The Aussie market upbeat as earning season cranks up a notch this week with 10 of the largest blue chips anticipated to revise their 2021 outlook higher amid March’s vaccination roll-out. Following suite, the Japanese Nikkei posted a 1.2% intraday gain of their own. Morning preliminary GDP figures revealed a more resilient economy emerging out of the pandemic than previously forecasted. Both household and corporate spending continue to lift as well as international trade.

    Wall Street ended last week on a high. Words of reassurance from Janet Yellen amid her first G7 meeting had the U.S. Treasury Secretary voice among the rest of her G7 counterparts that “the time to go big is now” on fiscal support for 2021. On a fading note, the 45th President Donald Trump was for a second time acquitted from impeachment. Though the final Senate vote was 57 guilty to 43 not guilty, a super majority of 67 guilty votes was required to convict.

    UK and European benchmarks reversed intra-day losses on Friday, as investors clanged onto the ever-improving progress of Joe Biden’s $1.9tn stimulus package. Relief was also found in the World Health Organisation, of whom are expected to approve AstraZeneca’s coronavirus vaccine as early as today for worldwide use for all adults.

    The reflation trade has the U.S. dollar index settle near the week’s low. Following a brief intermission in the last 3 days, the Singaporean dollar was back on track towards the 1.3200 level. The nation had suffered its worst annual economic contraction since independence. However, confidence returned on Monday with the Ministry of Trade and Industry releasing a projected economic rebound between 4% – 6% in 2021. Gold steadies at $1,824 whilst crude resumes its parabolic rise to above $60 as an artic blast dominates parts of the U.S, freezing oil pipelines.

    Weekend action saw bitcoin on the verge of hitting $50,000 only to pull back down to $47,000. The cryptocurrency had recorded an all-time high at $49,694 and up 70% since the start of the year. With its recent rise fuelled by speculative action from Wall Street and the almost inevitable adoption by main street corporations as an alternate form of payment.

Crude Oil-Feb-15-2021-04-38-25-53-AM

Figure 1 (Source: IS Prime): Crude Oil Daily : A perfect storm from a global economic rebound to an artic blast freezing supply see’s crude surge to $60.

Headliner to Review

  • The UK unexpected grew by 1.0% in Q4 largely from contributions in the service sectors, whilst manufacturing slowed and construction activity contracted alongside nation-wide lockdowns.
  • Likewise, Japan posted a 3% quarterly growth whilst consensus was at 2.4%. Household spending remained resilient and corporate outlook revisions for 2021 saw private investment rise.

Headliner to Watch

  • RBA to release monetary meetings on Tuesday. This month’s decision left cash rates unchanged and reassurances hawkish endeavors will be left on hold till 2023.

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Antony Tan
Ben Li
Kevin Jock