Market Commentary – February 22, 2021

Kevin Jock

22nd February 2021

    Inflation rhetoric back on the menu with Wall Street broad-based benchmarks ending the week lower. Whilst expectations see a combination of vaccines and additional stimulus spurring on a global economic recovery, worries remain over runaway inflation halting progress. Especially as the 10-year Treasury yield climb to 1.39%, a 1-year high.

    Buoyed by upbeat quarterly earnings, European indices defied global sentiment to post positive gains. Confidence was further reassured by immunization data coming out of Israel, depicting Pfizer’s COVID-19 shot at effectively curbing transmission of the virus. Meanwhile the UK’s FTSE100 slipped just under 20 index points. Nevertheless, good news ahead as PM Boris Johnson is expected to lay out plans on Monday regarding the easing of social restrictions.

    Cautious start across Asia with Australia, Japan and Hong Kong failing to hold their initial rallies on open. This despite a report released by Deloitte surveying Australian CFO’s, 72% of whom feel optimistic for 2021 and vaccinations moving ahead of schedule as PM Scott Morrison were among the first patch to receive the shot. Likewise, announcement out of HSBC reveals executive relocation to Hong Kong this year as the global bank see’s the special territory as the future epicenter of revenue.

    Bitcoin notches new highs over the weekend to record 58,354, gaining just under 20% last week, approximately doubling its value since the start of the new year and topping $1tn in market capitalization. The cryptocurrencies rise in value came alongside mainstream acceptance of utility as an alternate form of payment.

    U.S. dollar loses risk-on status as the Greenback retreats on Friday alongside an increase in global yields. Early Asia session saw the Kiwi dollar soar 50 pips to 0.7338 on the back of rating firm S&P rewarding New Zealand efforts in successfully containing COVID-19. And subsequently ensuring a faster economic rebound among developed nations. Crude oil fell back below $60 as arctic storm passes Texas with refinery production is expected to restart this week.


Figure 1 (Source: IS Prime) AUDUSD Daily : Aussie dollar knocks on .8000 level door as the ccy hits a 3 year high against the U.S.

  • 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

  • German business sentiment expected to edge higher from 90.1 to 90.5 as social distancing measures ease.
  • Q4 retail sales in New Zealand to contract 0.5% following a historic rebound in Q3 which revealed a 28% expansion. The figure is expected as the economy normalizes to pre-pandemic pace.

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Antony Tan
Ben Li
Kevin Jock