Market Commentary – October 23, 2020

Kevin Jock

23rd October 2020

    Ahead of America’s final presidential debate between President Trump and candidate Biden, Wall Street exhibited a choppy U.S. session, starting in the red, the Dow and S&P500 recovered back into positive territory. Across the Pacific, U.K. and European markets trimmed Wednesday’s losses following Britain’s Finance Minister Sunak announcing new measures to protect furloughed workers and cash grants for affected businesses.

    In Asia, subsequent after a heated U.S. debate, markets were mixed with Hong Kong rallying 0.72% whilst Australia and Japan slid lower. Much of prevailing mood is still dependant upon the whipsawing U.S. stimulus saga. Yesterday, House Speaker Pelosi and Treasury Secretary Mnuchin signalled we’re “just about there” as one of the four key disputed points was near resolving. The remaining points to settle include state and local government aid, school funding and liability shielding for businesses from coronavirus related incidents.


Figure 1 (Source: IS Prime): USDTRY Weekly Chart : Unexpected no change in weekly repo rates leaves the Turkish Lira just 700 pips shy from the 8.0000 level.

    Elsewhere, the Turkish lira tumbled 1.6% on Thursday after the monetary policy committee surprisingly kept one-week repo rates unchanged at 10.25%. Analyst was expecting an increase of 200 basis points to 12.25% following September’s 200 basis point increase as the country gripes with double digit inflation (11.75%).

    Thailand’s student-led protest battles on with recent demonstration surrounding the country’s seat of government. In an attempt to calm public sentiment, the government has lifted the state of emergency. Despite intensifying protest, the Thai baht has consolidated between a tight range between 31.000 – 31.330.

    Meanwhile, the greenback lost ground against the Aussie and Kiwi, though the Pound and Euro retraced back 60 and 40 pips respectively as Brexit negotiator met in London hoping to avoid a no-deal outcome. Gold was down $20 for the day but remained above $1,900. Oil whipped back above $40. And Bitcoin continued its run closing just above 13,100 following PayPal’s announcement.

Headliner to Review

  • U.S. unemployment claims fell to 787,000 in the week ended Oct17 from 860,000. Since September figures, recovery in the U.S. labour market has stalled coinciding with expiration of first COVID relief package. New application for unemployment benefits fell to lowest levels since coronavirus pandemic since March.
  • Conference Board Leading Index m/m increased by 0.7% in September, compared with the increase of 1.4% in August and 2.0% increase in July. The US LEI increased in September, driven primarily by declining unemployment claims and rising housing permits.
  • New Zealand CPI figures rebounded from -0.5% to 0.7%. It followed the nations successful protocols in combating COVID-19’s spread and subsequent re-opening of the economy. However, the number was slightly worse than the forecast of 0.9%.

Headliner to Watch

  • Europe and U.K. is set for a deluge of flash services and manufacturing PMI data today. Overall, figures in both continents are expected to decline amid their second-wave of COVID-19.
    • E.U. Flash Manufacturing from 53.7 to 53.0
    • E.U. Flash Services from 48.0 to 47.1
    • U.K. Flash Manufacturing from 53.2 to 54.1
    • U.K. Flash Services from 56.1 to 53.4


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Antony Tan
Ben Li
Kevin Jock