Market Commentary – September 28, 2020

Kevin Jock

28th September 2020

    A lack of major macroeconomic data in the day ahead, combined with China’s Mid-Autumn Festival leaves global indices and futures off to a mute start in Asia’s session. Despite posting three consecutive weeks of losses, Wall Street surged in the latter half of Friday’s session with the Nasdaq, S&P500 and Dow posting gains of 2%, 1.3% and 1% respectively. U.S. Technology firms remain in investor favour, resilient to renew virus fears whilst European benchmarks were hampered by rising inflection cases. Worries are mounting over the possibility of stricter social lockdown measures across northern Britain and London.

    Since money laundering allegations on the 21st, the U.S. dollar index has enjoyed a resurgence in popularity as investors sentiment turned risk-off and sought safe-haven attributes. The appreciation further fueled by a lack of definitive clarity by Chairman Powell, on the Fed’s new guidance framework. Mixed with potential volatility arising from Tuesday’s Presidential debate, the greenback nears a 2-month high. Elsewhere, a final round of Brexit trade deal negotiations scheduled Monday saw money flows out of Europe.

USD Index

Figure 1 (Source: Refinitiv): US Dollar Index Daily : Risk off sentiment sees investors seeking safe-haven assets like the American greenback.


    Opposing factors leave crude oil directionless as the prospect of demand recovery turns bleak over COVID-19. Despite Saudi Arabia’s attempt to reign in output limits, nations like Libya and Iran continue to export above OPEC’ quotas. Nevertheless, crude oil inventories have posted deficits 8 of the past 9 weeks.

    Gold settles just above the 1,850 level after declining 4.3% for the week, whilst bitcoin remained above 10,000.

    On the coronavirus front, cases top 32.9M, with deaths set to exceed 1M by the end of this week. Indian’s curve remains on an upward trend as the nation is deemed the new epicenter of the COVID pandemic. With 6M cases and rising, Prime Minister Modi has criticized the U.N. for keeping India out of decision-making processes of the global body.


Headliner to Review

    • The figures of US Core Durable Goods Orders m/m and Durable Goods Orders m/m are worse than expected. Core Durable Goods Orders m/m decreased from 2.6% to 0.4% while Durable Goods Orders m/m dropped from 11.4% to 0.4%.
    • Public Sector Net Borrowing in UK increased from 14.7 billion to 35.2 billion, which was slightly better than the expected 40.6 billion. The UK’s public finances have continued to a record deficit in 2020-2021, with the central government borrowing 221.2 billion pounds in the first five months of the financial year under coronavirus pandemic.

Headliner to Watch

    • ECB President Christine Lagarde is due to speak at the ECON committee of the European Parliament at Brussels today. No surprises here, alas she may echo previous concerns that if a strengthening Euro destabilizes price, the ECB may look to intervene.
    • The BOJ will release their Summary Of Opinions tomorrow detailing projections for inflation and economic growth. Though business sentiment is expected to remain upbeat over Suga’s appointment as P.M, inflation data out of Tokyo, a leading indicator for the nation is expected to contract 0.3%.

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Antony Tan
Ben Li
Kevin Jock