Market Commentary – March 23, 2021

Kevin Jock

23rd March 2021

    Wall Street rebounds convincingly following a turbulent week with Nasdaq outperforming gaining 1.8% on Monday. Yields surprisingly calm as the 10-year treasury bill stabilises below 1.7%, despite assertions by the Federal Reserve to let looser capital requirements for banks to expire in March. Previously introduce to support money liquidity during the COVID-19 pandemic. Elsewhere, President Biden is anticipated to unveil an additional 3tn government spending package this week for infrastructure, energy, and education. The ambitious 2nd package would complete one of Biden’s pledges he was elected for in 2020.

    Meanwhile, virus resurgence across Europe continue to weigh down major indices alongside a vaccine distribution schedule in doubt despite the ECB ramping up bond purchases from 18bn to 21.1bn. Reintroductions of social restriction measures have raised concerns on knock-on effects on the economy.

    Mixed start across Asia with both the S&P200 and Nikkei reversing early gains, whilst the Hang Seng tumbled 1.9% on open. Growing geo-political tension hampered Hong Kong sentiment as the American, Brits, The EU and Canada imposed sanctions across multiple Chinese nationals and entity over human right abuse on Uyghurs in Xinjiang. In response, China enacted sanctions of their own.

    The U.S. dollar edged lower across majors, gold closes at $1,738 and crude shores up just above $61. Bitcoin tumbles from $58,000 to $55,000 following reports that cryptocurrency fund inflows have declined 58% last week.

NZDUSD-1

Figure 1 (Source: IS Prime) NZDUSD Daily : Kiwi dollar breaks below previous support after the government removed tax incentives on property in an attempt to rein in on surging house prices.

Headliner to Review

  • In February of this year, the Chicago National Activity Index stopped rising for two consecutive months and unexpectedly returned to a negative value. The previous value was increased to 0.75 and then fell back to – 1.09. It was negative for the first time since last April. The market expected to fall back to 0.71.
  • US existing home sales stopped rising for two consecutive months in February this year. It fell from 0.2% -6.6% month-on-month, the worst since May last year, falling back to 6.22 million at an annual rate, the lowest since August last year. It was far less than the city’s original expectation of 6.5 million.
  • The number of US air passengers on Sunday exceeded 1.5 million for the first time since March 2020, reaching 1.54 million. It exceeded 1 million for the 11th consecutive day.
  • New Zealand’s total credit card spending in February this year again expanded to 1.9% month-on-month. It has fallen for three consecutive months.

Headliner to Watch

  • Investors will keep keen interest on Treasury Secretary Yellen and Fed Chair Powell’s testimony today before the House Financial Services Committee for quarterly Cares Act headings. Agenda’s on the table include the state of America’s recovery and performance of fiscal and monetary policy during the COVID-19 crisis.

 

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Authors:
Antony Tan
Ben Li
Kevin Jock