Market Commentary – February 23, 2021

Kevin Jock

23rd February 2021

    Wall Street echoes Monday’s losses as inflation expectations continue to rise alongside a potential commodity super cycle in the making and its impact to the real economy. Broad rally in metals saw the likes of copper soar to $9,000 a metric ton, a 9-year high. Rotation out of big-tech left Nasdaq underperforming suffering a 2.8% decline as the premium held during the pandemic subsides.

    UK’s FTSE100 up 0.5% as investors celebrate PM Boris Johnson’s four-step road map to ease all social restrictions by mid-June. Meanwhile, to ensure the economy does not double dip, Chancellor Rishi Sunak will extend the governments coronavirus furlough scheme into Summer. Across the channel, European benchmarks were buoyed by remarks from ECB President Christine Lagarde whom said the central bank has a close eye on the current upward trajectory in bond yields. Alluding to potential intervention in the future.

    Value-seeking in Asia spurred Australia’s S&P200 to rally 72 index points on open. Largely benefiting from booming commodity prices. Likewise, the Hang Seng gained 1.9% with the Hong Kong government budget deficit set to hit record highs following cash handouts to households and businesses.

    Much like how Elon’s tweet propelled bitcoin to records and the subsequent adoption into Tesla’s balance sheet. Elon’s hubris, tweeting prices of Bitcoin “do seem high” pulled the rug beneath the cryptocurrency’s feet as it tumbled from an intraday high of $57,646 to $47,476 within minutes.

    Ahead of Jerome Powell’s testimony before the Senate Banking Committee, the U.S. dollar hits a 1-month low in anticipation the Fed Chair would reassure that the central bank will tolerate above norm inflation levels before considering hawkish endeavours. Gold rebound banks above $1,800 whilst crude hits $62.50.


Figure 1 (Source: IS Prime) Bitcoin 5-min : Considered a decentralized alternative to centrally bank backed currencies, seemingly very centralized around Elon Musk’s tweets.

Headliner to Review

  • Germany’s Ifo business climate index rose from 90.3 to 92.4 after the seasonal adjustment in February this year, which was much higher than market expectations of 90.5.
  • The current conditions index unexpectedly rose to 90.6 while the market expected to drop from 89.2 to 89. As for the expectation index for the next six months, it will rise sharply from 91.5 to 94.2, which was far better than the market expectation of 91.8.
  • The Consultative Council’s Leading Economic Indicators (LEI) rose for nine consecutive months, and the month-on-month increase slightly expanded 0.5% to 110.3, in line with market expectations.
  • In the United States, the Chicago National Activity Index rose for two consecutive months in January this year, from 0.41 to 0.66, which was higher than market expectations of 0.4. During the period, 53 of the 85 sub-indices made positive contributions compared with the previous quarter while the remaining 32 made negative contributions.

Headliner to Watch

  • Joblessness in the UK expected to worsen with claimant count change to double to 13.8k and the unemployment to edge higher to 5.1%. Largely a result of the strict nationwide restriction’s which has taken place the past months.
  • No changes expected from the RBNZ, though investors will keep a keen eye on the central banks outlook especially as the S&P200 reiterates it’s triple A rating.

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Antony Tan
Ben Li
Kevin Jock