Market Commentary – October 13, 2020

Kevin Jock

13th October 2020

    Amid observance for Columbus Day, U.S. technology company’s led Wall Street’s advance with Amazon, Apple and Twitter posting gains between 4.75% – 6.35% respectively. A combination of U.S. stimulus negotiations progressing and a COVID-19 resurgence in Europe (benefiting stay-at-home tech firms) was partly fueling Monday’s rally.

    Despite Italy and U.K. preparing for stricter restrictions jeopardizing an already fragile economic recovery, European benchmarks tracked Wall Street’s overnight gains hitting a five-week high.

    Coming into Asia’s, the Hong Kong Stock Exchange remains closed as the territory braces for a level 8 typhoon whilst Australia continues to outperform rallying 0.6% on open. Since October, the Aussie S&P200 has been end in the green 6 of the last 7 sessions. Japan remains in consolidation as investors await direction from the newly elected Prime Minister Suga.


Figure 1 (Source: Refinitiv): NASDAQ Daily Chart : Tech firms back in favour as the U.S. benchmark only 2.6% shy off of historic highs.. 

    Reprieve for the American greenback on Monday though investors are now pricing in regardless which congressional party wins November elections, an astounding stimulus package would follow. Risk-off sentiment follows the Japanese yen with the USDJPY declining 0.41%. Elsewhere the PBOC’s surprise intervention appears to have stifled China’s yuan appreciation as the USDCNH reversed back Friday’s losses.

    A culmination of U.S producers restarting facilities after Hurricane Delta, Norwegian oil workers returning to work and a force majeure of Libya’s largest oilfield saw oil prices sink 3%. Global demand for oil thus far has been lethargic, despite China’s strong recovery. Seemingly to ensure China met trade requirement set forth in January’s deal with the U.S, the country had already imported a surplus in August and September.

Headliner to Review

  • In yesterday’s Citizens’ Open Forum Panel, Bank of England Governor Andrew Bailey continues to assert Bitcoin has little intrinsic value. He said, “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value. It may have extrinsic value in the sense that people want it.” He said people should consider Bitcoin’s volatility and risk when investing it.
  • Ahead of tomorrow’s monetary policy decision, Singapore’s central bank chief Ravi Menon raised concerns over his remarks stating 20% of the country’s economy may have received irreversible damage a result of the pandemic. Particularly the aviation and tourism sector.

Headliner to Watch

  • K. expected to see a rise in unemployment claims from 73.7K to 78.8K alongside the unemployment rate rising from 4.1% to 4.3%. Since September the government had begun rolling back the furlough stimulus program and in turn negatively impacting labour markets.
  • As U.S. stimulus remains on negotiation tables, monthly CPI is set to decline from 0.4% to 0.2%. Without either a global recovery or government assistance, inflationary pressures remain weighed down.
  • European economic sentiment expected to deteriorate the first time since COVID-19 struck. ZEW see’s figures declining from 73.9 to 72.0, largely in part to a resurgence in inflection cases and the evitable re-lockdown measures.

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Antony Tan
Ben Li
Kevin Jock