Market Commentary – March 1, 2021

Kevin Jock

1st March 2021

    Hong Kong investors today welcomed news that the Hang Seng will undergo a major overhaul. The index is anticipated to increase the number of constituents, cap the weightings of individual companies and ease listing criteria in hopes to dilute the sway of any individual stock price. Following industry consultation, concerns arose over the growing influence of mainland megacap’s on the benchmark particularly as the HKE has become the preferred destination to list.

    Meanwhile, the Nikkei rallied 1.3% as the government announces ending its state of emergency early for 6 prefectures early after COVID-19 infections came under control. Leading economic indicators in housing and joblessness fuelled Australia’s S&P higher by 0.8%. Job advertisements in Australia is currently at 2 and half year highs alongside house prices recorded their biggest monthly gain in 17 years, soaring 2.1%.

    Friday saw Nasdaq hold a previous support level at 12,800, whilst elevated Treasury yields continue to impact cyclical firms weighing down the S&P500 and Dow. Bond jitters did not spare U.K and European counterparts. The FTSE100 underperformed among the lot, declining 1.4% .

    Nonetheless, optimistic news over the weekend with the Democratic-controlled House passing President Biden’s $1.9tn additional relief aid. The bill now awaits a Senate vote, where the floor is currently split 50-50 between Democrats and Republicans with the Vice-president casting the tie-breaker vote.

    Since reaching an all-time at $58,354 back on February 21st, bitcoin has fallen 26% touching $43,165 on Sunday. Elon’s tweet “That said, BTC & ETH do seem high lol“ which initiated the decent remains on Twitter.

    The US dollar index extends its advance against majors as investor’s pull speculation closer that the Fed could turn hawkish as early as next year. Crude still above $62, though gold tumbles $36 to $1,734

USDTRY-Mar-01-2021-05-07-08-46-AM

Figure 1 (Source: IS Prime) USDTRY Daily : A months’ worth of appreciation reversed in a single week as signs that President Erdogan will once again interfere in Turkeys’ central banking policy.

Headliner to Review

  • Australia’s manufacturing index in February this year rose from 55.3 to 58.8, the highest since March 2018, reflecting that the recovery of the local manufacturing industry has accelerated significantly.
  • Singapore’s producer price index (PPI) in January this year increased to 1.8% month-on-month. The year-on-year figure decreased from 7.7% to 5.1%. It has fallen for at least one year in a row.
  • Canada’s industrial price index (IPPI) in January this year increased to 2% month-on-month, slightly higher than market expectations, rising by 1.9%, mainly due to the continued price of energy, petroleum products and timber and other related products. Boost
  • The China comprehensive PMI output index in February 2021, showing that in February, the comprehensive PMI output index was 51.6%, a drop of 1.2 percentage points from the previous month, indicating the Spring Festival The overall production and operation activities of enterprises continued to expand during the month.

Headliner to Watch

  • Manufacturing data across US, EU, Canada and Switzerland is expected to reveal either no change or a slight tick up. Since Mid-2020, all indexes had recover from the initial shock of COVID-19 and had remained in expansionary territory.
  • RBA cash rate tomorrow with no changes expected. Most expect the Central Bank to observe the impact when government job subsidies expire this month (March) before further monetary policy consideration are made.

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Authors:
Antony Tan
Ben Li
Kevin Jock