Market Commentary – February 16, 2021

Kevin Jock

16th February 2021

    First trading session following Lunar New Year see’s the Hang Seng hit a 32-month high to above 30,600. Hong Kong is expected to ease social-distancing rules on the 17th February, much to the relief of small businesses, particularly restaurants who can now remain open beyond 6pm. Meanwhile, the Japanese Nikkei rockets past 30,000 for the first time since 1990, gaining 3.5% in 2-days. Japan is expected to initiate vaccination programs this week with broader optimism reflecting a strong economic rebound from COVID-19. Japanese Finance Minister Aso, further reassured investors during the G7 summit, agree with U.S. Treasury Secretary Yellen that now is not the time to withdraw fiscal support.

    Monetary meeting minutes released today by the RBA boosted Australia’s S&P200 into positive territory. “Members concluded that very significant monetary support would be required for some time…before the bank’s goal for inflation and unemployment were achieved”.

    As Americans celebrate U.S. President’s Day, futures on Wall Street pointed higher, ending Monday’s session at all-time highs. President Biden plans to take his first official tour visiting Milwaukee, Wisconsin in bid to appeal to public opinion, pressuring Congress in speedily passing the $1.9tn stimulus package. Elsewhere, recovery speculation fuelled European markets to a 1 year high. Though recent leading indicators revealed a contracting industrial sector, investors clang onto hope a global recovery would drag Europe out of its current dire predicament.

    Crude oil continues to trade above $60 a barrel as extreme weather conditions wreak havoc on supply lines. Amid already sharp cutbacks from OPEC, oil production in the Permian Basin has fallen by 1 million barrels a day with temperature reaching sub-zero. Refineries also took a hit as on Monday the largest U.S. oil refinery shut down entirely.

    The US dollar index weakens, as major counterparts such as the British pound surges above 1.39, unseen since 2018. Gold edges lower to $1,818 and bitcoin reattempts 50,000 only to fail reach a high of $49,920.  


Figure 1 (Source: IS Prime):Post-Brexit certainty see’s a resurgence in confidence within the British Pound

Headliner to Review

  • Canada’s manufacturing sales in the fourth quarter of 2020 rose 1.1% quarter-to-quarter. However, due to the COVID-19 pandemic, Canada’s full-year manufacturing sales in 2020 fell 11.4% year-on-year to C$610.6 billion, the lowest since 2015.
  • The total merchandise exports of the Eurozone for the whole year of 2020 dropped by 9.2% year-on-year to 2,131.4 billion euros, ending consecutive years of growth; total merchandise imports dropped by 10.8% year-on-year to 1,897 billion euros, ending consecutive years of growth. The trade surplus increased by 6.1% year-on-year to 234.5 billion euros. The trade volume with the region fell 8.9% year-on-year to 1,797 billion euros.
  • The Japan’s industrial production index was unexpectedly increased after the seasonal adjustment in December last year. The monthly decline only expanded to 1% (the previous value fell 0.5%) to 93.8 (previous value 93.2) while the market originally expected to decrease 1.6%. The adjustment was also increased by 0.6% year-on-year, and the decline narrowed to 98.1 (previous value 97.5). It has fallen for 15 consecutive months.

Headliner to Watch

  • Flash Employment Change q/q in Europe expected to decrease from 1.0% to 0.9%.
  • Flash GDP q/q in Europe expected to remain unchanged at -0.7%.

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Antony Tan
Ben Li
Kevin Jock