Market Commentary – March 25, 2021

Kevin Jock

25th March 2021

    Wall Street struggled to shake off newfound bearish sentiment as leading economic indicators disappoint market. Wednesday saw technology decline outpace cyclicals with Nasdaq down 2% whilst the Dow Jones ended unchanged. Meanwhile, before the Senate committee, Federal Reserve Chair Powell dismissed Republican lawmaker’s concern President Biden’s $1.9tn could overheat the committee and noted the market volatility we’ve recently experienced has been an “orderly” adjustment.

    Mixed results across Europe with Germany’s DAX edging lower despite a reversal from Chancellor Merkel over a controversial Easter lockdown. Finger pointing begins as the EU mistaken a stockpile of 29m AstraZeneca vaccine doses as illegal shipments ready for international distribution. On the bright side, the shortage of vaccinations is seemingly resolved as Spain welcomes the news rallying 0.7%. Following an onslaught of criticism dragging into dispute that the initial efficacy of 79% utilized outdated clinical data, fresh reports by AstraZeneca reveal a slightly lower effective rate of 76% in a U.S. study.

    Recent performance from the Hang Seng has been underwhelming as it corrects back to levels unseen since the start of January. China’s recent tapering does Hong Kong no favours as Beijing implements their exit strategy from pandemic-era stimulus. Elsewhere Australia and Japan rally on open.

    Crude oil rebounded $3.50 to above $60.50 after one of the worlds largest container ships ran aground in the Suez Canal consider a vital trade artery. Attempts to dislodge the 200,000-ton Ever Given have failed, disrupting approximately 10% of daily seaborne trade, of which includes liquefied natural gas.

    The dollar strengthened among peers, gold at $1,735 and waning demand for bitcoin see’s the cryptocurrency fall to $52,000.


Figure 1 (Source: IS Prime) AUDUSD Daily : Aussie dollar convincing break’s below a head and shoulders technical pattern

Headliner to Review

  • The US Service Industry Purchasing Managers Index (PMI) in March of this year hit an 80-month high, rising from 59.8 to 60, which was the highest since July 2014. It was in line with market expectations.
  • The US Manufacturing Purchasing Managers Index (PMI) in March this year rose from 58.6 to 59, which was lower than the market expectations of 59.3. It has been expanding for 9 consecutive months.
  • U.S. crude oil inventories unexpectedly increased for five consecutive weeks during the week ended March 19. The weekly growth rate continued to decrease from 2.396 million barrels to 1.912 million barrels. The total amount increased to approximately 502.72 million barrels. The market’s original expectations changed. It fell by 272,000 barrels.
  • The Eurozone consumer confidence index improved for the second consecutive month in March this year, from the previous value of -14.8 to -10.8, the highest since last February, which was far better than market expectations of -14.5.
  • The average house price in the UK in January this year slowed again to 7.5% (the previous value was decreased to only 8%, the highest since June 2016, which was less than the market’s expected increase of 8.3%; the average house price was 249,300 pounds.

Headliner to Watch

  • SNB anticipated to announce no changes in policy rate currently at -0.75%.
  • BOC Governor Macklem, ECB President Lagarde and BOE Governor Bailey due to speak at a virtual panel about central bank innovation hosted by the Bank for International Settlements
  • US unemployment claims expected to lower from 770k to 727k whilst final quarterly GDP estimates to stay at 4.1%

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Antony Tan
Ben Li
Kevin Jock