Market Commentary – November 24, 2020

Kevin Jock

24th November 2020

    Short of a full concession, President Trump directed the General Services Administration to initiate formal transition processes following Michigan’s election board certifying results sealing President-elect Biden’s win. Wall Street further welcomed news that Biden’s administration has selected Janet Yellen to serve as Treasury secretary. The first women in the role, but more importantly a friendlier figure towards big banks and financial markets than progressive picks like Senator Elizabeth Warren. By the end of Tuesday session, both the S&P500 and Dow rallied 0.7% and 1.3% respectively, though the Nasdaq underperformed on the back of AstraZeneca’s vaccine announcement. Unlike Pfizer and Moderna, the new vaccine boast a 70% prevent rate, rising to 90% under certain conditions. However, the University of Oxford coordinated trial drew harsh criticism for its lack of sample size.

    Meanwhile, European indices gapped higher on open but failed to follow through during yesterday’s session. Despite promising vaccine developments, daily infection cases across the continent remains high whilst the economic damage from wide ranging lockdown measures becomes more apparent.

    Asia’s poised to climb following a boost in sentiment from the overnight U.S. session. Thus far, Australia has rallied 0.7% intra-day and remarkably of the past 16 days, 14 has ended in positive territory. Likewise, the Nikkei resumed their winning streak hitting a 29-year high whilst Hong Kong gapped up 0.5% on open.


Figure 1 (Source: IS Prime): XAUUSD Daily Chart : Demand for safe-haven assets deteriorate on the back of a 3rd vaccine development.

    Mixed results from the American greenback as better than expected PMI data offset coronavirus woes. Against the pound, the U.S dollar lost ground as Brexit negotiators showed promising progress towards inking a draft. Whilst, a boost in risk appetite underpinned the Japanese yen’s safe-haven demand. Following similar themes, gold successfully breached the strong support zone around 1,850 to settle at 1,837. Elsewhere, bitcoin steadies itself below all time highs and crude oil closes 4 consecutive days higher on better demand recovery prospects.

Headliner to Review

  • US Flash Services PMI rose to 57.7 in November, of which the Flash Manufacturing PMI rose to the highest level since 2015, and the manufacturing PMI also rose to 56.7, the highest level since September 2014, reflecting a significant improvement in the economy.
  • In October, The Chicago Fed’s national activity index rose for the first time in four months. The index rose from 0.32 to 0.83, far higher than market expectations.
  • The UK Flash Manufacturing Purchasing Managers Index (PMI) in November unexpectedly rose to 55.2 from 53.7 in October, a three-month high. The market expected it to fall to 50.5.
  • Due to the rebound of the pandemic and tightening restrictions, German Manufacturing Purchasing Managers Index (PMI) dropped from 58.2 in October to 57.9 in November, which was higher than market expectations of 56.5.
  • The French Manufacturing Purchasing Managers Index (PMI) unexpectedly contracted again in November, falling from 51.3 in October to 49.1, a six-month low, which was lower than market expectations of 50.2.

Headliner to Watch

  • Out of the U.S, consumer confidence figures are expected to deteriorate for the month of November where election result uncertainty and plaguing viruses play upon American mood. The index is set to decline from 100.9 to 97.7
  • RBNZ set to release the Financial Stability Report with Govenor Adrian orr expected to speak after.
  • Construction activity in Australia continues to contract q/q from -0.7% to -2.0%, as the industry stalls from the prevailing virus outbreak.

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Antony Tan
Ben Li
Kevin Jock