Market Commentary – November 29, 2021

Kevin Jock

29th November 2021

Global equities were hit by their hardest falls for more than a year as the discovery of a new coronavirus variant “Omicron” sparked a sell-off in companies most exposed to the pandemic and a dash to safe havens. Wall Street’s major indices all dropped by over 2%, while the virus vaccine makers rallied, with Moderna soaring 21% and Pfizer gaining 6%. The Vix index, a measure of expected volatility in Wall Street stocks over the next month, rose 10 points on Friday to 29, the biggest increase since early 2021.

European stocks plummeted amid widespread selling on Friday. FTSE 100, CAC40 and DAX all dropped massively by 3.64%, 4.75% and 4.15% respectively. Travel stocks were the worst performers this week, down 13.6% as both the EU and UK moved to impose travel restrictions on a group of southern African nations.

In Asia, Japanese stock index Nikkei pared almost all of its early losses on Monday, as investors tried to assess the extent of damage the Omicron variant could cause to the economy, currently remain nearly flat before the mid-day close. Meanwhile, HK’s Hang Seng index slid below 24,000 points on Monday morning. Shares in gambling group Suncity Group Holdings were suspended from trade with its CEO believed to be among 11 people arrested by Macau authorities over alleged links to cross-border gambling and money laundering.

Crude oil benchmarks on both sides of the Atlantic settled down by more than 10%, the biggest falls since April 2020 after the discovery of the new virus variant, with the Brent crude trading at $72.8 a barrel on last Friday’s close. Gold price saw a flush of volatility, reaching as high as $1815.5 per ounce then retracted back to close at $1790.95. AUDUSD drops back to 0.7140, following a timid bounce off a three-month low surrounding 0.7114, during Monday morning in Asia, as Australia reports first case of Omincron but PM Morrison rejects calls of quarantine before Christmas.

image_2021_11_29T05_06_10_218Z

Figure 1 (Source: IS Prime) IDX.AU.200 Daily : Virus variant pelts Aussie market, with the benchmark dropping nearly 3.2% on Friday. One of its’ worst performing days since inception of 2021.

Headliner to Review

  • Swiss GDP grew by 1.7%, following an increase of 1.8% in the second quarter. Value added grew markedly in the affected service sectors as a result of the further relaxation of COVID measures.

Headliner to Watch

  • Chinese monthly Manufacturing PMI is expected to be 49.8 points, still in the contraction territory but greater than previous month’s figure of 49.2 points.
  • Canadian monthly GDP figure is due to release in tomorrow, forecasted to remain flat at 0%.

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Authors:
Antony Tan
Kerry Man