Market Commentary – May 20, 2021

Kevin Jock

20th May 2021

    Volatile session across Wall Street with major benchmarks initially slipping ahead of the FOMC meeting minutes. However, upon release subsequently recovered lost ground made amid intra-day. Nasdaq outperformed ending the day above open price whilst the S&P500 and Dow Jones declined as much as 1.4% and 1.5% but rallied back up to post losses of only -0.4% and -0.2% respectively. Almost as if investors found solace after the minutes revealed some Federal Reserve officials were open in discussing scaling back quantitative easing should the economy continue to recovery at sufficient pace. This deviates from Fed Chair Jerome Powell’s constant reassurances that the central bank remains to be super accommodative.

In Europe and the UK, indices largely followed U.S. price action but nonetheless still ended the session lower. The largest factor continually weighing down risk appetite is still inflationary pressure. Risk that was reinforced by Wednesday’s CPI data out of the EU, UK and even Canada. CPI data in the UK accelerated, remains elevated in the EU, and beat expectations in Canada. Following a public holiday, the Hang Seng gapped half a percent lower. Meanwhile, the S&P200 regained all lost ground from Wednesday and the Nikkei edged up 0.3%.

    Rollercoaster ride on bitcoin as the digital asset fell 30% yesterday only to rebound off the $30,000 level to rally back up to $38,000. Without Elon’s support on top of governments across the globe circling in, particularly in relation to taxation, the crypto market cannot catch a break.

    With taper discussion on the table, the U.S. dollar gained across the board, crude falls slumps to $63 on supply risk and gold steadies around $1,869.


Figure 1 (Source: IS Prime) Bitcoin Daily : After a 30% intra-day decline, bitcoin finds support at 30,000 level to rebound back above 39,000 today.

Headliner to Review

  • Mixed data out of Australia’s labour market with the unemployment rate declining to 5.5% whilst employment losses amounted to -30.6k. Following the halt of government job subsidies, businesses have had to cut back on staffing.
  • CPI data out of the EU, UK and Canada depicted a similar picture of elevated inflationary pressure across the globe. The major factors had been the rise in the cost of commodity prices from oil to metals.
  • As expected, crude oil inventories went into a surplus of 1.3M from -0.4M.

Headliner to Watch

  • Unemployment claims data out of the U.S. expected to decline from 473K to 453K. Largely attributable to President Biden’s continuing stimulus efforts shoring up business confidence.
  • Philly Fed manufacturing index set to normalise after a temporary spike in consumer demand in Q1 driven by stimulus checks.
  • Retail sales in Australia expected to post 3 consecutive months of growth.
  • Bank of Canada governor Tiff Macklem to hold a press conference about the Financial System Review.

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Antony Tan
Kevin Jock