Market Commentary – March 17, 2021

Kevin Jock

17th March 2021

    Wall Street treads softly ahead of FOMC on Wednesday with Dow Jones retreating from record highs and S&P500 mute. Revised optimistic outlooks from analyst for bluechips Apple and Microsoft led Nasdaq 0.6% higher whilst 10-year Treasury yields stay elevated above 1.6%. No policy changes are expected, with investors focusing in whether Federal Reserve Chairman Powell has changed his tone during his press conference, as well as deciphering changes in the tune of the central banks FOMC statement.

    At least 16 EU nations have now either suspended or limited the usage of AstraZeneca’s vaccine over risk of blood clotting despite counterclaims there is no hard evidence of linkage. Even so, the EU regulator has stated overalls benefits from the jab far outweigh the risk. As the path of economic recovery from 2020’s pandemic become clearer, Europe’s benchmarks steady following dramatic gains of recent weeks, alongside support from the ECB pledging to speed up the pace of asset purchases. In contrast, increasing signs from BOE Governor Andrew Bailey depict a central bank likely to sit on their hands leaves the FTSE100 much to be desired.

    In Hong Kong, social distancing will be extended till March end and snap street lockdown now the norm. The Hang Seng subdued, as is the S&P200 and Nikkei with investors awaiting the Federal Reserve meeting.

    The U.S. dollar little changed among majors as was gold whilst crude oil crept lower to $64.94. Bitcoin found support at the $53,000 rebounding to $56,000 as Elon Musk officially changes his title to “Technoking of Tesla” and Tesla’s CFO to “Master of Coin”.

USDTRY-Mar-17-2021-05-59-08-58-AM

Figure 1 (Source: IS Prime) USDTRY Daily : Turkish lira at an impasse as it awaits whether the central bank will raise rates to fend off inflation or stay reluctant after words of discouragement from President Erdogan.

Headliner to Review

  • Affected by unusually cold weather and winter storms in other parts of Texas and the southern region, US retail sales in February this year dropped by 3% month-on-month, which was the worst since the record decline in April last year. It was far worse than the market expectations of 0.5%.
  • The monthly increase in the US import price index in February this year decreased from 1.4% to 1.3%, which was still higher than market expectations. It has risen by 1% and has been rising for four consecutive months.
  • The ZEW Economic Sentiment Index in the Eurozone rose for four consecutive months in March this year, from the previous value of 69.6 to 74, which was the highest since February 2004.
  • As of the week of March 12, 2021, API crude oil inventories in the United States unexpectedly stopped increasing for three consecutive weeks. It fell by 1.05 million barrels on a turnover basis. The market expected an increase of 2.715 million barrels. Gasoline inventories fell for three consecutive weeks. It continued to fall by 926,000 barrels per week, which was much lower than market expectation.

Headliner to Watch

  • Inflation in Canada expected to pick up from 0.6% to 0.7% largely from higher durable good and gasoline prices.
  • Crude oil inventories anticipate to decline following previous weeks build-up from last month’s arctic storm.
  • No changes expected from Wednesday’s FOMC meeting, rather focus will be on the statement’s outlook and the subtle tones of Fed Chair Powell during the press conference.
  • New Zealand’s GDP figures set to normalise for 2020 Q4 figures after a sharp rebound in Q3. Market consensus see’s 0.2% in economic growth.
  • Australian jobs markets expected to remain healthy as another 31.5K Aussies is set to be employed. The jobless rate also to decline to 6.3% from 6.4%.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Ben Li
Kevin Jock