Market Commentary – March 16, 2021

Kevin Jock

16th March 2021

    Economic recovery story continues to grab headlines with Wall Street taking advantage of stabilising treasury yields to surge to all-time records. Both the S&P500 and Dow Jones edged higher 0.4% and 0.3% respectively, alongside Nasdaq up 1.1% as teetering AstraZeneca problems throws Europe’s vaccination schedule in doubt and in turn the global recovery.

    On Monday, following Bulgaria, Denmark, and Norway’s decision last week, five more European nations have suspended the Oxford/AstraZeneca jab including Germany over concerns the vaccine may cause blood clots. This despite reassurances from WHO urging Europe not to pause programs, iterating there’s no signs of problems. Likewise, British medical experts have asserted the shot is both “safe and effective”. Vaccination news weighed down EU indices with the Dax underperforming, lower by 0.5%.

    Meanwhile, Brexit disputes back on the table as Brussels launches legal actions against the UK over breaches on Northern Ireland. Earlier this month Downing Street ease unilateral trade conditions with the Irish violating the treaty and consequently could have Britain facing trade sanctions.

    Asia followed the overnight session higher as Australia rallied 74 points and Japan 190 points whilst the Hang Seng faces pressure from both political and COVID front. Hong Kong media mogul Jimmy Lai has now been imprisoned pending trial under the new national security law, President Xi warned of intensifying crackdowns on China’s tech giants and COVID outbreak saw surprise lockdowns in Mid-levels and Central.

    Lacklustre news left the U.S. dollar mute, oil remains above $65, gold edged higher to $1,731 and bitcoin plummets from a high of $61,000 to $53,193 in two days.

AUS200-3

Figure 1 (Source: IS Prime) AUS200 Daily : Australia’s S&P200 underperforms among developed nations as the benchmark consolidates since November 2020. With fiscal stimulus set to expire this month and a central bank reluctant to ease especially as house prices soar, investors find little reason to add onto exposure.

Headliner to Review

  • Led by housing prices in Sydney and Melbourne, the two major cities, Australia’s national housing price index increased to 3% quarter-on-quarter after the fourth quarter of last year, which was the strongest since the end of 2019 and was higher than market expectations by 1.8%.
  • Canada’s February seasonally adjusted sales of existing homes increased from 2% to 6.6% month-on-month, setting record highs repeatedly. Actual sales activity in Canada in February without seasonal adjustments rose 39.2% year-on-year, a record high in the same month. Almost all Canadian housing markets have recorded growth for the eighth consecutive month.
  • Canada’s January manufacturing sales rose from 1.3% to 3.1% month-on-month to 56.245 billion Canadian dollars, which was better than market expectations.
  • The New York manufacturing index continued to rise on a monthly basis, rising from the previous value of 12.1 to 17.4, the highest since November 2018. It was higher than market expectations of 15.

Headliner to Watch

  • Following an exceptional January, retail sales figures in the U.S. are expected to contract slightly in February at -0.5% whilst core sales to stay positive at 0.2% largely resulting from the winter blizzard that swept across South – East US.

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Authors:
Antony Tan
Ben Li
Kevin Jock