Market Commentary – September 23, 2020

Kevin Jock

23rd September 2020

    Recent rising COVID-19 cases and threats of lockdown in Europe, along with US general election on November will be the main concern in the market. Right now, the unclear direction over coronavirus policy and lack of new fiscal stimulus plan are causing a new level of uncertainty in the market. Concerns and anxiety have been rising about the second lockdown in the world especially in Europe, contributing more anxiety of renewed restrictions in the US.



Figure 1 (Source: IS Prime): IDX.US.500 Intraday


    The US index rebounded from few days losing streaks. The Dow Jones Industrial Average rose by 0.51%, S&P 500 rose by 1.05% and Nasdaq Composite rose by 1.71%.

    It is expected that the US dollar is stronger in the short term as the rising cases of coronavirus in Europe, but uncertainty about the US presidential election makes it more volatile.

Headliner to Review

  • Bank of England (BoE) Governor Andrew Bailey continues to speak on Tuesday and expect negative rates in near future as coronavirus infection rise. The governor said, “BoE is going to do everything we could do in our remit and powers to support the people and businesses of this country.” He said the BoE would not increase interest rates until the economy is recovering strongly.

  • Federal Reserve Chairman Jerome Powell said, ““We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy,” It can be seen that economic activity has picked up from depressed level but it is still well below the pre-pandemic levels.

  • The Reserve Bank of New Zealand (RBNZ) remained its official cash rate at 0.25% as expected as the economic hit from coronavirus was less severe than expected.

  • Japan’s Flash Manufacturing PMI increased slightly to 47.3, compared with the 47.2 in the previous month. The PMI showed a slight improvement in service-sector activity, but the figure is still below 50 threshold that separates contraction from expansion for a 17th month.

Headliner to Watch

  • The Purchasing Managers’ Index (PMI) in German, French UK and Europe will be released. Following the disappointing figures in August, the downward trend in PMI are expected due to the threat of lockdown measures from COVID-19.

  • In the US, prelim private sector PMIs will be released, and it is Fed Chair Powell’s 2nd day of testimony. It may influence the market as well.

  • Crude Oil Inventories will be released. It is expected that the oil inventories will change from -4.4M to -2.5M.

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Antony Tan
Ben Li
Kevin Jock