Market Commentary – February 19, 2021

Kevin Jock

19th February 2021

    Overnight concerns of a fragile recovery reverberated across Asia rattling investor risk-appetite. Early morning retail sales figures from Australia cemented worries after substantially missing market consensus. Consequently, the S&P200 tumbled as much as 1.5% intra-day. With the $80bn stimulus scheme scheduled to be scrapped in March, Aussie’s will have the rug pulled out from under. Elsewhere, the Japanese Nikkei and Hong Kong’s Hang Seng followed suit, edging lower.

    Wall Street nurses another day of losses after an unexpected spike in unemployment claims despite the expectations stimulus checks from the previous administration would buoy a lethargic labour market. Upon release, the Nasdaq again underperformed, declining as low as 1.6% before recovering ground by sessions end following Treasury Secretary Yellen on CNBC defending the need for the $1.9tn pandemic package.

    Third day of losses out of Europe. Vaccine hope against the new variant out of South Africa was dented after further trials revealed Pfizer’s jab as significantly less effective. Disappointing headline corporate earnings alongside ECB minutes depicting weary policymakers over the euro’s strength hitting exports further weighted down benchmarks.

    Crude oil took a dive from $62 to $59 as the National Weather Association warns extreme weather conditions will not only remain through next week bringing “significant ice accumulations and heavy snowfall” but also extend towards the East Coast from Texas. With refineries shut, U.S. production capacity is now at 60%, equivalent to a loss of 4 million barrels a day.

    Weak economic data saw majors gain against the U.S. dollar. Meanwhile gold held its level at $1,772 and profit taking in bitcoin left the cryptocurrency just below $52,000.


Figure 1 (Source: IS Prime) EURGBP Daily : British pound breaks a yearly high against the Euro following Brexit. Though disputes continue over matters such as Northern Ireland and bi-lateral trade.

Headliner to Review

  • The Philly Fed Manufacturing Index in February this year decreased sharply from 26.5 in January to 23.1, which is still higher than market expectations20, reflecting that the slowdown in the expansion of manufacturing activities.
  • The unemployment claims in the United States for the week ended February 13 unexpectedly increased for two consecutive weeks. It is increased by 13,000 to a total of 861,000, a four-week high. The market expected a total of 765,000.
  • The monthly increase in the US import price index in January this year further expanded to 1.4%, the largest increase in seven months. It was significantly higher than market expectations and the previous figure 1%. It has been rising for three consecutive months.
  • The number of building permits in the United States unexpectedly rose for three consecutive months in January this year. The monthly increase expanded to from 4.2% to 10.4%, increasing to 1.881 million at an annual rate, highest since May 2006. The market expected to fall back to a total of 1.678 million.

Headliner to Watch

  • Retail sales figures expected to contract across the globe.
    • UK figures set to decline from 0.3% to -3.0%
    • Canadian figures set to decline from 1.3% to -2.5%
  • Services sector anticipated to rebound in the U.K and EU whilst manufacturing to suffer.
    • UK manufacturing to decline from 54.1 to 53.1. Services to rally from 39.5 to 42.1
    • EU manufacturing to decline from 54.8 to 54.8. Services to rally from 45.4 to 45.9

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Antony Tan
Ben Li
Kevin Jock