Market Commentary – March 12, 2021

Kevin Jock

12th March 2021

    Wall Street continued momentum higher as Joe Biden formally signs the $1.9tn stimulus package on Thursday at 2 P.M. Among American benchmarks Nasdaq outperformed gaining 2% as tech closes off recent divergences with value and growth. Meanwhile, the President softened U.S – China rhetoric ahead of next week’s face-to-face meeting between the administrations Secretary of State and Beijing’s foreign minister. Both sides are hoping to avoid looking weak whilst simultaneously attempt to repair relations between two global superpowers.

    Despite geo-political steps in the right direction, the Hang Seng fell 0.85% following a coronavirus cluster on Hong Kong Island. Already more than 240 people have been sent to quarantine with authorities expecting about 60 new cases from the outbreak linked to a super-spreader at a popular gym. In contrast, Australia’s S&P200 edged higher and the Nikkei up 1.3% on economic optimism.

    Whilst the German DAX lagged, remaining European indices posted consecutive sessions of gains following the ECB’s reiteration of their dovish stance. The central bank president Christine Lagarde noted they would use the 1.85tn quantitative easing program more generously over the next months to counter yield tightening.

    As treasury yields steady near 1-year highs, demand for the U.S. dollar falters. Crude just below $66 and declining favourability for gold sees the precious metals edge lower to $1,722. Bitcoin resumes its meteoric rise, briefly reaching beyond $58,000 intraday.

Hang Seng-4

Figure 1 (Source: IS Prime) Hang Seng 1-minute : Growing COVID-19 cluster threaten’s Hong Kong attempts to re-open the economy just 1-month after easing social restriction measures.

Headliner to Review

  • The US dollar index fell to 91.42. he response to U.S. Treasury auction helped reduce the concern about investors’ ability to absorb an increase in debt. The European Central Bank hinted at increasing the speed of printing money to maintain the cost of credit in the euro zone, affecting the euro’s upward trend.
  • The number of job vacancies in the United States in January this year increased by 165,000 month-on-month, from 6.752 million to 6.917 million, far exceeding market expectations of 6.65 million. During the period, the number of layoffs fell for two consecutive months, from 1.82 million to 1.69 million.
  • For the week ended March 6th, the number of people claiming unemployment benefits for the first time in the United States fell by 42,000, from 754,000 to 712,000, which was close to the low set in the week of November 7 last year. It was lower than the market’s expected total of 725,000 people.
  • The main refinancing rate in Europe remains unchanged at 0% alongside an increased pace in bond purchases for the next 3 months.

Headliner to Watch

  • Canadian job market expected to rebound following 2 consecutive months of contraction. Employment change set to reverse from -212.8k to 98.5k, whilst the unemployment rate to improve from 9.4% to 9.2%.

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Authors:
Antony Tan
Ben Li
Kevin Jock