US Stock Market Overview – Stock Close Mixed Led Higher by Discretionary Shares; Energy Shares Underperformed

 

The major averages closed mixed on Thursday, as large-cap technology continues to trend higher. Most sectors in the S&P 500 index were lower, led down by Energy shares. Cyclicals bucked the trend. Amazon shares continued to rally, helping the discretionary sector notch up gains. Jobless claims declined more than expected, which helped buoy the 10-years yield. Oil prices edged lower, despite mixed inventory reports, which showed a net loss in stockpiles. Housing Starts and Building Permits came in stronger than expected, reflecting robust home sales driven by low-interest rates. President Joe Biden on signed an executive order requiring masks to be worn on airplanes, trains, buses and at airports. The Trump administration declined to mandate masks in air travel and other transportation modes.

Jobless Claims Fall More than Expected

The Labor Department reported that jobless claims totaled 900,000 for the week ended January 16. That was slightly less than expectations of 925,000 and below the previous week’s downwardly revised total of 926,000. Continuing claims showed a slight decrease for the week, falling by 127,000 to 5.05 million.

Housing Starts Rose more than Expected

According to the Commerce Department, Housing starts increased by 5.8% to an annual rate of 1.669 million units in December. Expectations were for Housing starts to rise to a rate of 1.560 million units in December. Homebuilding increased 5.2% on a year overyear. Starts totaled 1.380 million in 2020, up 7.0% from 2019. Building Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December. Permits, which typically lead starts by one to two months, totaled 1.452 million last year, a 4.8% increase from 2019.

US Economy Anchored by Strong Factory, Housing Sectors While Labor Market Recovery Fades

Fresh U.S. economic data released on Thursday showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

US Weekly Jobless Claims Decline Moderately

The number of Americans filing new applications for unemployment benefits decreased modestly last week as the COVID-19 pandemic tears through the nation, raising the risk that the economy shed jobs for a second straight month in January.

Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 900,000 for the week-ended January 16, the Labor Department said. Economists polled by Reuters had forecast 910,000 applications in the latest week.

Some of the elevation in claims reflects people re-applying for benefits following the government’s recent renewal of a $300 unemployment supplement until March 14 as part of the nearly $900 billion in additional fiscal stimulus.

Mid-Atlantic Manufacturing Rebounds in January:  Philadelphia Fed

A gauge of manufacturing activity in the U.S. Mid-Atlantic region rebounded in January to its highest level in eight months and the outlook is the brightest in more than a year and a half, the Federal Reserve Bank of Philadelphia said on Thursday.

The regional Fed bank’s business conditions index rose to 17.0 from an upwardly revised 2.4 in December. That easily topped expectations for a reading of 3.8 in January, according to a Reuters poll of economists.

The six-month outlook rose to 38.4, the highest since May 2018, from 34.8 last month. The new orders, employment and prices paid indexes all showed improvement.

US Housing Starts, Building Permits Accelerate

U.S. homebuilding and permits surged in December as historically low mortgage rates supported the housing market, but momentum could slow amid surging lumber prices and a shortage of labor.

Housing starts jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month, the Commerce Department said on Thursday. Economists polled by Reuters had forecast starts would rise to a rate of 1.560 million units in December. Homebuilding increased 5.2% on a year-on-year basis. Starts totaled 1.380 million in 2020, up 7.0% from 2019.

Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December. Permits, which typically lead starts by one to two months, totaled 1.452 million last year, a 4.8% increase from 2019.

Single-family homebuilding, the largest share of the housing market, soared 12.0% to a seasonally adjusted annual rate of 1.338 million units. Single-family starts have increased for eight straight months.

Single-family building permits raced 7.8% to a rate of 1.226 million units in December. Homebuilding is being supported by lean inventories, especially for previously owned homes.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Gain Ground After Better-Than-Expected Initial Jobless Claims Report

Initial Jobless Claims Declined To 900,000

The U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims report indicated that 900,000 Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 910,000. Meanwhile, Continuing Jobless Claims declined from 5.18 million to 5.05 million while analysts expected that they would increase to 5.4 million.

Job market reports exceeded analyst expectations and provided additional support to S&P 500 futures which are gaining ground in premarket trading. Most likely, traders will remain focused on the upcoming stimulus package, and stocks will have a good chance to test new highs during today’s trading session.

Housing Starts Increased By 5.8% In December

In addition to the job market data, traders have a chance to take a look at Housing Starts and Building Permits reports for December.

Building Permits grew by 4.5% month-over-month compared to analyst forecast which called for growth of just 0.1%. Housing Starts increased by 5.8% compared to analyst forecast of just 0.2%.

The housing market continues to show strength, supported by low interest rates and unprecedented stimulus. The continued growth of the housing market may provide additional support for stocks.

Crude Inventories Unexpectedly Increase

Oil faced significant resistance near multi-month highs at $53.90 and pulled back after API Crude Oil Stock Change report indicated that crude inventories increased by 2.6 million barrels while analysts expected that they would decline by 0.3 million barrels.

Traders will likely wait for the confirmation of this data from EIA, whose Weekly Petroleum Status Report will be published on Friday. The oil market remains in a bullish mode as traders expect that the new U.S. stimulus package will boost demand for oil, but a sudden increase in inventory levels may hurt momentum in the near term if EIA report shows a similar picture.

At this point, the market looks ready to ignore API data, and oil-related stocks are set to start the trading session on a strong note.

For a look at all of today’s economic events, check out our economic calendar.

An Economic Recovery in the Waiting. COVID-19 Vaccination Rates Suggest a Longer Wait for Some

Economic Recovery

Following the 2nd quarter economic meltdown of 2020, major economies rebounded in the 3rd quarter.

A reopening of borders and businesses spurred the recovery. Many hoped that the worst of the COVID-19 pandemic had passed.

Going through the 4th quarter, however, conditions deteriorated rapidly once more.

The number of COVID-19 cases soared across the U.S, Europe, and beyond.

Amidst the doom and gloom, the Chinese economy provided a glimmer of hope.

Last week, 4th quarter GDP numbers impressed. While a spike in new COVID-19 cases in China muted the impact of the stats on riskier assets but the recovery was plane to see.

Other economies, have been less fortunate.

Those most at risk of an extended period of contraction are economies most dependent upon consumption and tourism.

For now, the global financial markets appear to be signaling a more uniform global economic recovery through 2021.

The latest COVID-19 numbers, vaccination rates, and containment measures paint a different picture, however.

The Economic Calendar

Next week, 4th quarter GDP figures are due out of the U.S, Germany, and France to name but a few.

Looking at the forecasts, the U.S economy is projected to grow by 4.4% in the 4th quarter.

It’s a different story for France and Germany, however.

Extended lockdown periods through late 2020 will likely lead to another sizeable quarterly contraction.

Economists have forecasted the French economy to contract by 3.2% and Germany’s by 4.6%.

Relative to the 2nd quarter of 2020, the contractions are relatively mild. By historical standards, however, these are quite dire forecasts.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the U.S vaccination rate was 5.23 doses per 100 people as at 20th January.

With President Biden’s aim of 100 million vaccinations in 100 days, this is expected to accelerate in the coming weeks. The numbers have already picked up from quite dire levels just last week. As at 10th January, the U.S had had a vaccination rate of just 2.44 doses per 100 people.

While other countries face supply issues, this has not been the case for the U.S. To put it into perspective, 48% of shots distributed to states in the U.S have been administered. In numeric terms, 17.18 million doses have been administered.

Much will now depend on whether the U.S President meets his 100 million target or needs to reintroduce lockdown measures.

At the time of writing, the total number of COVID-19 cases in the U.S sits at 24,998,975, with the total number of deaths hitting 415,894.

Any acceleration in new cases and the U.S government may have little choice but to contain the spread. With labor market conditions still in dire straits, this would have painful consequences for the U.S economy.

The only goods news is that the Democrats now control both houses. Delivering fiscal support should be easier. Bringing unemployment back to pre-pandemic levels, however, is likely to be a far more difficult task.

Elsewhere, a number of governments have made strong progress in driving vaccinations. This bodes well for more rapid economic recoveries. These nations are few and far between, however.

Israel continues to lead the charge, with a vaccination rate of 32.56 doses per 100 as at 20th January. The U.A.E remains ranked 2 in terms of vaccination rates. (20.11 doses per 100 as at 19th Jan).

As at the 20th January, the UK is also at the top end of the table, with a vaccination rate of 7.59 doses per 100.

The EU

For the EU, however, the slow authorization of COVID-19 vaccines and apparent bad planning has been reflected in the figures.

EU wide, the vaccination rate stood at just 1.51 doses per 100 people as at 20th January. When considering the fact that the total number of COVID-19 cases is more than 10 million, this remains a concern.

Not only are we likely to see economic divergence globally but also within the EU.

Germany’s vaccination rate stood at 1.56 doses per 100 as at 20th January. By contrast, France’s vaccination rate was just 1.07.

Italy and Spain were amongst leading EU member states with rates of 2.07 and 2.21 doses per 100. These rates are also on the lower end for developed nations, however.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

Supply and Demand

Since the approval of vaccines in the U.S, Europe, and beyond, supply has become a focal point.

Back in December, we had highlighted supply as a key consideration as governments procure vaccines.

Some governments have been able to secure enough vaccines to inoculate 100% of their populations.

Others will barely touch the surface and will have to wait.

When considering the vaccination rates today and the need for 2 doses, it could be a long wait.

Some governments will undoubtedly be wanting to avoid going into another winter once this winter season passes.

Until there are more vaccine options and greater supply, however, this remains a credible risk for some.

As things stand, therefore, we continue to see Johnson & Johnson and AstraZeneca as two key players in the fight against the global pandemic.

Johnson & Johnson is key due to its goal to deliver a single dose vaccine. AstraZeneca remains key due to is affordable and easy to transport vaccine, not to mention manufacturing capabilities.

Government agencies including the EMA will need to authorize the use of these vaccines more hastily to support a speedier economic recovery.

The markets can then begin to look to developing economies that have continued to struggle since the beginning of the pandemic. Failure of the likes of Europe to catch up with the U.S and even the UK, could lead to an economic decoupling.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 97,384,877 confirmed COVID-19 cases and 2,085,507 related deaths.

By geography, the U.S had reported 24,998,975 cases and 415,894 COVID-19 related deaths.

India reporting 10,611,719 cases, with Brazil reporting 8,639,868 cases.

Sitting behind Russia (3,655,839) remained the UK (3,505,754).

France (2,965,117), Italy (2,414,166), Spain (2,412,318), and Germany (2,090,161) reported a combined 9,881,762 cases.

Looking Ahead

Existing vaccine providers are going to need to materially increase supply in order to support the bullish outlook towards the economic recovery.

Market sensitivity to reports of any supply constraints will likely build in the current quarter. Failure to ramp up vaccination rates coupled with supply constraints would have an even more material impact on risk sentiment. All of this is before considering a continued rise in new cases and further extensions to lockdown measures.

For now, the pressure will be on the likes of AstraZeneca and Johnson & Johnson to deliver.

A marked increase in supply from Pfizer Inc. and Moderna Inc. would also be welcome.

At some point, however, the focus may well shift to how well or how badly governments have performed.

FBS CopyTrade Launches A New Card Scanning Feature!

The FBS CopyTrade team has created a new feature for a more convenient app use! To make financial transactions like deposits or withdrawals, users can now scan their cards with their phone cameras.

No need to squint at all those symbols and put them in manually one-by-one. Now to complete a financial transaction, users can tap the card icon in the Card number field when filling in card information and let technology do all the dirty work. The app will fill in the card number, cardholder name, and the expiration date – the CVV2 code needs to be put in manually. The feature is available in the FBS CopyTrade app for both iPhone and Android users.

FBS CopyTrade app is the first of FBS products to introduce this feature. We will not stop here: our team is working relentlessly to make sure the investors have a great time using the FBS CopyTrade app. Our app has received awards as the most user-friendly social trading app – and we work hard to prove that we deserve these awards.

The FBS CopyTrade App is a dynamically developing platform for social trading. It is usually named the most user-friendly and easy-to-use copy trading application.

The app was launched in 2018. It is used by more than 5 million investors. FBS CopyTrade allows people who are less experienced in trading to increase their capitals by copying the selected skilled traders. The traders get an income from each copier’s deposit after a successful transaction. The support team of the app operates 24/7 with more than 15 languages.

FBS is an international broker with over 190 countries of presence and 11 years of expertise, providing knowledge via free seminars, special events, educational materials, and daily analytics.

FBS is an official trading partner of FC Barcelona from January 2020.

Bitcoin Sidetracks from $40,000. What Happens Now?

Bitcoin’s wild rally in 2020 was fueled by the Feds printing over $3 million to battle the COVID-19 crisis. The US dollar weakened with inflation, while BTC price soared. People discovered trading at home with brokers offering attractive no-commission services. All you need is a phone and an Internet connection to trade.

This year, the price trend continues with more money printing anticipated. US President-elect Joe Biden revealed last week his $1.9 trillion COVID-19 relief proposal, which could push Bitcoin prices further.

BTCUSD stalls at $34,437 after peaking at about $42,000 [1D], SimpleFX WebTrader

Surprisingly though, Biden’s announcement made a very weak bullish response from the Bitcoin market so far. As of writing, BTCUSD continues to trade sideways at $34,437, which is down by 20% from the new high but still up by 17% this year to date.

As people used their checks to invest in cryptocurrencies, big-time investors and Hollywood stars investing in Bitcoins strengthened the hype even more. Even billionaire Paul Tudor considers Bitcoin as the top hedge against inflation.

JP Morgan analysts have equated Bitcoin as the “digital gold” and said that it could hit $146,000 eventually. However, in the near term, if Bitcoin can’t reclaim the $40,000 level, an “investor exodus” could happen. Those who want to take profits are likely to cash out and fuel the recent correction, weakening Bitcoin’s momentum cues until the end of March.

BTCUSD performance since January 2020 [1D], SimpleFX WebTrader

The macroview and the on-chain analysis for Bitcoin give a “wildly bullish” impression to analysts like Jeff Ross from Vailshire. BTCUSD is also far above the 50-, 100-, and 200-day SMAs, showing a favorable tone. According to Bitcoin bull PlanB, the strong performance and new trading volumes could spark a run to the $48K level.

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Asia-Pacific Shares Track Wall Street Higher on Hopes of Massive New US Stimulus

The major Asia-Pacific stock indexes were mixed but mostly higher on Thursday with Hong Kong giving back a portion of this week’s stellar gains. Shares in the region rose after stocks on Wall Street soared to record highs as U.S. President Joe Biden was sworn into office.

Investors are hopeful the incoming Biden administration will be able to secure passage of a massive new stimulus package to cushion the economic damage of the COVID-19 pandemic.

Republicans in the U.S. Congress have indicated they are willing to work with President Joe Biden on his administration’s top priority, a $1.9 trillion U.S. fiscal stimulus plan, but some are opposed to the price tag. Democrats took control of the U.S. Senate on Wednesday, though they will still need Republican support to pass the program.

But after record high closes on Wall Street Wednesday, markets in Asia reflected relief over an orderly transition of power and strong expectations that U.S. stimulus will provide continued support for global assets.

Cash Market Performances

In the cash market on Thursday, Japan’s Nikkei 225 Index settled at 28756.86, up 233.60 or +0.82%. Hong Kong’s Hang Seng Index finished at 29927.76, down 34.71 or -0.12% and South Korean’s KOSPI Index closed at 3160.84, up 46.29 or +1.49%.

China’s Shanghai Index settled at 3621.26, up 38.17 or +1.07% and Australia’s S&P/ASX 200 Index finished at 6823.70, up 53.30 or +0.79%.

Hong Kong Stocks Snap 5-Day Winning Streak on Profit-Taking

Hong Kong stocks ended lower on Thursday, snapping a five-day winning streak, as investors locked in profits following sharp gains helped by strong demand from mainland investors.

Bank of Japan Leaves Interest Rates Unchanged Amid Gloomy Outlook

The Bank of Japan (BOJ) left its main policy unchanged after forecasting the economy will regain more lost growth than previously thought once it starts to recover from the current state of emergency.

The BOJ held its interest rate and asset buying setting intact, according to a statement from the central bank on Thursday. All 44 economists surveyed by Bloomberg predicted no change in the bank’s main policy levers ahead of a policy review in March.

Market participants showed scant reaction to the largely in-line outcome of the meeting, with stocks and the Japanese Yen little changed from levels before the decision.

Australia’s Unemployment Rate Drops to 6.6 Percent as 30,000 More People Find Work

Australia’s unemployment rate has dropped to 6.6 percent as 30,000 more Australians found work in the wake of the COVID-19 pandemic.

New data from the Australian Bureau of Statistics (ABS) showed that for December 2020, the number of employed people in the country was a figure 784,000 higher than it was in May.

Despite the dramatic recovery, the total number of employed people was still down year-on-year because of mass COVID-19 layoffs.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Index Futures Testing Record Highs as Earnings Season Continues

U.S. stock futures are edging higher in overnight trading on Wednesday following a flat opening after the major cash market averages hit record highs on inauguration day.

At 07:21 GMT, benchmark S&P 500 Index futures are up 0.27%. The blue chip Dow Jones Industrial Average is trading higher by 0.16% and the tech-based NASDAQ Composite is up by 0.49%.

The early price action indicates investors have moved on from the bearish earnings report released by United Airlines after the close on Wednesday.

Major airline United dipped more than 2% in extended trading on Wednesday after missing on the top and bottom lines of its quarterly earnings. The airline warned sales would continue to suffer in the early part of 2021 as the coronavirus pandemic drags on.

Earnings season continues on Thursday with Baker Hughes, Union Pacific and Citrix reporting before the bell. Intel, IBM and CSX report after the closing bell on Thursday.

In economic news, the Labor Department will release last week’s jobless claims data at 13:30 GMT on Thursday. Economists polled by Dow Jones expect 925,000 Americans filed for unemployment last week, down from the previous week’s 965,000.

Wednesday Recap

U.S. equities rose to record highs on Wednesday as the latest batch of strong corporate earnings rolled in, as Joe Biden was sworn in as commander in chief.

The S&P 500 Index climbed 1.4%, notching an all-time high. The Dow Jones Industrial Average rose more than 250 points to close at a record and the NASDAQ Composite surged nearly 2%, closing at a record. The technology heavy index was helped by a 16% jump in Netflix’s stock on the back of the streaming giant’s strong earnings and subscriber results.

The rest of the FAANG group, due to report results in the coming weeks, jumped with Facebook Inc, Amazon.com Inc, Apple and Google-parent Alphabet Inc rising between 2% and 5%.

Eight of the 11 S&P sectors advanced in afternoon trading, with technology, communication services and consumer discretionary among the biggest gainers.

The broader banks index, however, shed about 1.6%, declining for the third day.

Earnings Results

Morgan Stanley edged higher after its quarterly profit blew past estimates driven by strength in its trading business.

Procter & Gamble Co raised its full-year sales forecast for a second time as it benefited from sustained coronavirus-driven demand for cleaning products. Its shares, however, slipped about 1.4% after it warned that the pace of sales might slow as vaccines roll out.

UnitedHealth Group Inc slid 0.3% after the health insurer’s quarterly profit slumped nearly 38%, weighed down by costs related to its programs to make COVID-19 testing and treatment more accessible for its customers.

For a look at all of today’s economic events, check out our economic calendar.

The U.S Dollar Hits Reverse Ahead of the ECB Monetary Policy Decision and Press Conference

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action early this morning.

Later this morning, the Bank of Japan delivers its first monetary policy decision of the year. While the markets expect the BoJ to continue to leave policy unchanged, the latest wave of the pandemic will be a concern.

Vaccination rates will need to materially pick up globally, not just in Japan, to support a sustained economic recovery.

Away from the economic calendar, sentiment towards the U.S economic outlook provided direction early on. Hopes of significant fiscal support drove demand for riskier assets early on.

For the Japanese Yen

The trade surplus widened from ¥366.1bn to ¥751.0bn in December 2020. Economists had forecast a widening to ¥942.8bn.

According to the Ministry of Finance,

  • Exports rose by 2.0% in the month of December, while imports slid by 11.6%.
  • For the calendar year, 2020, exports slid by 11.1%, with imports tumbling by 13.8% to leave the trade surplus at ¥674.73bn.

By geography,

  • Exports to Asia fell by 5.1%, in spite a 2.7% increase of exports to China. Imports from Asia saw a more marked 7.5% decline in the calendar year 2020.
  • To the U.S, exports tumbled by 17.3%, with imports from the U.S sliding by 14.0%.
  • Exports to Europe slid by 15.1%, driven by sizeable declines to Germany (-14.9%) and the UK (-24.3%). Imports fell by 13.7 from Europe in the calendar year.

The Japanese Yen moved from ¥103.547 to ¥103.572upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% to ¥103.55 against the U.S Dollar.

For the Aussie Dollar

Employment figures were in focus this morning.

According to the ABS,

  • Employment rose by 50k in December, following a 90.0k increase in November, which was in line with forecasts.
  • Full employment increased by 37.5k, following an 84.2k jump in November.
  • As a result, the unemployment rate slipped from 6.8% to 6.7%, while the participation rate rose from 66.1% to 66.2%.
  • Employment finished the year 0.7% below the March level, having fallen 6.7% between March and May.
  • The recovery in employment was largely as a result of a more marked recovery in part-time employment, however.

The Aussie Dollar moved from $0.77551 to $0.77516 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7768.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.31% to $0.7194.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

While there are no stats, the ECB is scheduled to deliver its first monetary policy decision of the year.

With the markets expecting the ECB to stand pat on policy, the ECB press conference will likely be the key driver.

Last week, ECB President Lagarde stood by the ECB’s growth forecasts for this year, in spite of extended lockdown measures.

We can expect plenty of discussion on price stability and the outlook during the presentation and the Q&A.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures will provide direction.

At the time of writing, the EUR was up by 0.16% to $1.2125.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. CBI Industrial Trend Orders are due out later today.

With little else for the markets to consider, expect the stats to influence.

Ultimately, however, COVID-19 news updates will likely remain the key driver near-term.

At the time of writing, the Pound was up by 0.15% to $1.3674.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include the weekly jobless claims figures and December’s Philly FED Manufacturing PMI.

Housing sector data for December, including building permits and housing starts are also due out. These will likely have a muted impact on risk sentiment, however.

Away from the economic calendar, President Biden’s first moves as U.S President together with COVID-19 news will also influence.

At the time of writing, the Dollar Spot Index was down by 0.15% to 90.340.

For the Loonie

It’s a quiet day on the economic data front. Economic data is limited to house price figures that will likely have a muted impact on the Loonie.

Chatter from Capitol Hill and COVID-19 news will be the key drivers on the day, with little else for the markets to consider.

At the time of writing, the Loonie was up by 0.13% to C$1.2620 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: Economic Data from the Eurozone and the U.S and the ECB in Focus

Economic Calendar:

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Eurozone Consumer Confidence (Jan) Prelim

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a bullish day for the European majors on Wednesday, with the DAX30 rising by 0.77% to lead the way. The EuroStoxx600 and CAC40 ended the day with gains of 0.72% and 0.53% respectively.

Economic data was on the lighter side, leaving the majors in the hands of corporate earnings and Inauguration Day.

With Joe Biden sworn in as U.S President, the markets are expecting plenty of fiscal stimulus to drive a U.S economic recovery.

Coupled with a planned drive to ramp up vaccination rates, the markets bet on a more rapid economic recovery.

Demand for riskier assets was broad-based as a result, also leading to a pullback in the U.S Dollar.

The Stats

It was a busier day on the economic calendar. Economic data included finalized inflation figures for the Eurozone and wholesale inflation figures from Germany.

In December, Germany’s producer price index rose by 0.8%, month-on-month, following a 0.2% increase in November. Economists had forecast a 0.7% rise.

According to Destatis,

  • The producer prices of industrial products were 0.2% higher in December 2020 than in December 2019.
  • Energy prices, however, were on average 0.1% lower than in December 2019.
  • Excluding energy, producer prices were 0.3% higher than in December 2019.

For the Eurozone, consumer prices rose by 0.3% in December, reversing a 0.3% decline from November.

While the annual core rate of inflation held steady at 0.2%, consumer prices fell by a further 0.3%, year-on-year, in December.

According to Eurostat,

  • Annual inflation was stable at -0.3% for a 4th consecutive month in December.
  • A year earlier, the annual rate of inflation had stood at 1.3%.
  • Greece (-2.4%), Slovenia (-1.2%), and Ireland (-1.0%) registered the lowest annual rates.
  • The highest contribution to the annual euro areas inflation came from services (+0.30 percentage points).
  • Food, alcohol & tobacco contributed +0.25 pp.

From the U.S

There was no economic data from the U.S to provide the European majors with direction late in the session.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Wednesday. Daimler rallied by 3.51%, with BMW and Volkswagen ending the day up by 3.01% and by 3.13% respectively. Continental rose by a more modest 1.82% on the day.

Daimler led the way mid-week as the markets responded to the unveiling of  the latest Mercedes-Benz’s electric compact SUV.

It was a mixed day for the banks, however. Deutsche Bank fell by 0.99%, while Commerzbank rose by 0.93%.

From the CAC, it was a bullish day for the banks. BNP Paribas and Soc Gen gained 0.70% and 0.59% respectively, with Credit Agricole rising by 1.54%.

It was a mixed day for the French auto sector. Peugeot ended the day flat, while Renault gained 1.86% on the day.

Air France-KLM bucked the general trend, falling by 0.86%, while Airbus SE ended the day up by 1.22%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Wednesday, marking the 8th daily loss of the year. Following a 4.52% fall on Tuesday, the VIX slid by 7.14% to end the day at 21.58.

The NASDAQ and the S&P500 rallied by 1.97% and by 1.39% respectively, with the Dow gaining by 0.83%.

A lack of economic data left the markets in the hands of corporate earnings and hopes of sizeable fiscal support from the new U.S administration.

Fresh record highs came as President Joe Biden was sworn in as the 46th U.S President.

On the corporate earnings front, Netflix was a front runner off the back of its earnings release, surging by 16.85%.

VIX 210121 Daily Chart

The Day Ahead

It’s a quiet day ahead on the economic calendar. Eurozone consumer confidence figures are due out late in the session to provide the European majors with direction.

Ahead of the stats, the ECB is in action this afternoon. With the markets expecting the ECB to stand pat on policy, the press conference will be the key driver.

From the U.S, the weekly jobless claims figures will also influence, though expect a delayed response with the release coinciding with the ECB press conference.

Away from the economic calendar, COVID-19 news, together with updates from Capitol Hill will also influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 18.5 points.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Market Overview – Stock Rally as Biden is Inaugurated

U.S. stocks rallied on Wednesday as Joe Biden was sworn in as the 46th U.S. President. Former President Donald Trump left the White House in the morning and did not attend President Biden’s inauguration. Most sectors in the S&P 500 index were higher, led by Communication and Real-Estate, Energy bucked the trend. Morgan Stanley reported better than expected earnings ahead of the bell driven by gains in trading. Last night after the closing bell, Netflix reported stellar earnings, which lifted its shares by 17.5%. Solid gains in other large cap tech shares helped lift the Nasdaq by more than 2%.

Biden Signs Executive Orders

Joe Biden will unwind several of the Trump executive orders on his first day in office. This will include implementing a national mask mandate on federal property, revoking a permit for the Keystone XL oil pipeline and reversing a travel ban from several Muslim and African countries.

Morgan Stanely reports Better than Expected Results

Morgan Stanely reported better than expected top line and bottom-line financial results. The company announced profits of $3.39 billion, or $1.81 a share. Revenue increased 26% to $13.64 billion. Both beat the consensus estimates of $1.30 on revenue of $11.58 billion. Trading revenue at Morgan Stanley rose 32% to $4.22 billion, a bigger jump than any other bank. Investment-banking fees increased 46% to $2.30 billion mostly due to $1 billion in revenue Morgan Stanley generated for underwriting initial public offerings and other stock offerings.

Yellen Takes Agreeable Tone

During here meeting for confirmation to the Treasury Secretary, Janet Yellen agree with all of her questioners but pushed back on fiscal policy, saying there was a need for another large fiscal package.  The fiscal support is shaping up to be a key test for the Biden administration.

STICPAY Introduces Cashback Program at Forex Brokers

STICPAY, a London-based fintech company and e-wallet provider, introduces a new cashback program in collaboration with the firm’s merchant partners.

With a growing number of broker partners participating in the program, the cashback gets credited directly into the customers’ STICPAY accounts in weekly or monthly settlements.

The rewards STICPAY customers can earn at each broker varies by their account type and trading activity as well as the service provider’s terms.

For these reasons, the firm created a simple calculator app so clients can see how much cashback they can earn at each service. Customers can also use the following table to check their broker’s rates as well as the requirements to participate.

How to Earn Cashback

For traders, it’s easy to participate in STICPAY’s cashback program.

As the first step, users have to log into their STICPAY accounts and head to the cashback program’s official website.

Once ready, customers can choose their broker and use a link provided by STICPAY for the signup.

Upon successful signup, the cashback customers earned at brokers will automatically get credited into their STICPAY accounts in either weekly or monthly settlements (based on each service provider’s terms).

STICPAY credits the cashback at 6:00 GMT every Monday for weekly and 6:00 GMT every first Monday of the month for monthly settlements.

Customers can withdraw the cashback they earned throughout the program anytime using one of the payment methods offered by STICPAY. Alternatively, they can hold, convert, or spend their balance at the company’s verified merchant partners.

About STICPAY

Founded in 2018, STICPAY is a London-based fintech company that serves customers in over 190 countries with a global e-wallet service. With a Year-Over-Year (YoY) growth of 300%, STICPAY has a strong presence in Asia. Due to the firm’s partnerships with domestic financial institutions, STICPAY offers the option for customers in seven Asian countries to top-up and withdraw funds rapidly and cost-efficiently using the local bank wire service.

While featuring advanced security and anti-fraud measures, the company recently redesigned its mobile apps for iOS and Android, allowing customers to enjoy the full STICPAY experience at the convenience of their smartphones. Along with eCommerce, the company considers the forex industry as one of its top markets for merchants.

Asia-Pacific Stocks Finish Mostly Higher as Alibaba Shares Soar in Hong Kong

Most of the focus was on Hong Kong where listed shares of Chinese tech juggernaut Alibaba surged following the reappearance of founder Jack Ma.

Asian shares were supported early as U.S. Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package to help the world’s largest economy ride out a pandemic-driven slump. At her confirmation hearing on Tuesday, she said the benefits of a big stimulus package to help the world’s largest economy ride out a pandemic-driven slump.

Cash Market Performance

In the cash market on Wednesday, Japan’s Nikkei 225 Index settled at 28523.26, down 110.20 or -0.38%. Hong Kong’s Hang Seng Index finished at 29962.47, up 320.19 or +1.08% and South Korea’s KOSPI Index closed at 3114.55, up 21.89 or +0.71%.

China’s Shanghai Index settled at 3583.09, up 16.71 or +0.47% and Australia’s S&P/ASX 200 Index finished at 6770.40, up 27.80 or +0.41%.

Hong Kong Shares End at Over 20-Month High on Tech Boost

Hong Kong shares ended at their highest level in more than 20 months on Wednesday, extending gains for the fifth straight session boosted by gains in tech stocks. The IT sector sub-index led the gains by rising 5.47%, with the heavyweight Alibaba Group recorded the best intraday gain in more than six months.

Alibaba’s founder Jack Ma made his first public appearance since October, as he spoke to a group of teachers by video, easing concerns about his unusual absence from public life and boosting shares in the e-commerce giant.

South Korea’s Kia Says Looking at Electric Car Projects with Multiple Firms after Apple Report

In corporate developments, shares of South Korean automaker Kia Motors surged 5.04% after the firm said it is looking at electric car projects with multiple firms, Reuters reported citing a regulatory filing.

That development came after a local online publication reported that Kia’s parent Hyundai Motor Group had decided Kia would be in charge of the proposed cooperation with Cupertino-based tech giant Apple on electric cars, according to Reuters.

Australian Shares at Near 11-Month High as Yellen Backs More US Stimulus

Australian shares ended firmer on Wednesday, taking cues from overnight gains in Wall Street, on expectations that a $1.9 trillion U.S. stimulus package would come through, while optimism over domestic corporate earnings also lent support.

Auto parts seller RPM Automotive Group, not an index constituent, advanced as much as 35.9% after raising its 2021 revenue forecast by 44%, while Ansell also rose after the glove maker forecast exceeding its earlier sales outlook.

Morgan Stanley recently said the upgrade cycle for ASX200 stocks in calendar year 2021 was underway and saw some signs of an earnings revival to come through in the upcoming February earnings season, estimating high-single-digit earnings growth in fiscal 2021.

Stocks Move Higher Ahead Of Joe Biden’s Inauguration

Traders Remain Optimistic As Biden Takes Office

S&P 500 futures are gaining ground in premarket trading as traders prepare for the first term of the new U.S. President Joe Biden.

Biden is expected to sign many executive orders in the first days of his presidency, reversing some of Donald Trump’s policies and boosting response to the coronavirus pandemic.

The market clearly provides Biden with the benefit of the doubt and expects that the new President will be able to provide additional support to the U.S. economy.

Market’s main focus is the new $1.9 trillion stimulus plan which should boost consumer spending at a time when Retail Sales have started to show weakness under the pressure from the second wave of the virus. If Biden succeeds in delivering the new stimulus package in the upcoming weeks, stocks will have an opportunity to gain strong upside momentum.

Janet Yellen Urged Lawmakers To “Act Big”

Yesterday, Janet Yellen stated that U.S. lawmakers should “act big” on the new coronavirus aid package to provide support to the economy.

She argued that the benefits of additional stimulus outweighed the risks of higher debt levels. Yellen’s dovish stance may serve as an additional upside catalyst for the markets.

Interestingly, foreign exchange market traders have not made up their minds on the impact of the new stimulus package, and the U.S. dollar was volatile but lacked direction in recent days. Meanwhile, stock traders are clearly optimistic about Yellen’s future policies.

Oil Moves Towards Multi-Month Highs

WTI oil is currently trying to get to the test of the recent highs at $53.90 as traders bet that the new round of stimulus will boost demand for oil.

Oil-related stocks had a strong trading session on Tuesday and look set to continue their upside move as investors put more money into the sector due to rising oil prices.

Oil traders have managed to ignore all negative developments on the coronavirus front and focused on the long-term picture. The current market mood remains bullish, and WTI oil has a good chance to get above recent highs and move towards the $55 level.

For a look at all of today’s economic events, check out our economic calendar.

COVID-19 Vaccine Update – Some EU Member States Break Ranks

EU Vaccine News

Following the EMA’s decision to bring forward the review of the AstraZeneca vaccine, EU member states are looking to get ahead in placing orders.

Over the weekend, news hit the wires that the Irish government was in talks to secure delivery of the yet to be authorized vaccine.

Pfizer Inc. supply issues experienced across member states has resulted in bid to secure supply from elsewhere.

Ireland expects to receive more than 3 million doses of the AstraZeneca vaccine. By receiving the vaccine ahead of the EMA recommendation and EU Commission authorization, it would mean that the vaccine could be administered immediately upon authorization.

Last week, the EMA had indicated that upon recommendation, the vaccine would be widely available by mid-February.

Ireland would therefore be around 2-weeks ahead of other EU member states. More importantly, Ireland may also avoid jostling with other EU member states for supply.

Having seen Britain go it alone on the vaccine front and approve the AstraZeneca vaccine late last year, Britain’s vaccination rates are well ahead of any of those seen across the EU.

Vaccinations

According to the Bloomberg Vaccination Tracker, Ireland’s vaccination rate stood at 1.90 doses per 100 people as at 13th January.

While well short of the likes of the Israel, the U.A.E and even the UK and the U.S, its well ahead of many other EU member states.

To put it into perspective, the EU has a vaccination rat of 1.41 doses per 100 people as at 19th January.

Italy and Spain had rates of 2.01 and 2.08 doses per 100 as at 19th January.

By contrast, however, France had a vaccination rate of just 0.90 doses per 100. The numbers from the Netherlands were even more alarming. As at 19th January, the Netherlands had a vaccination rate of just 0.45 doses per 100 people.

With the broad spread of rates, it is not wholly surprising that some EU member states are looking to jump the gun in securing vaccine supply.

Ireland is certainly not amongst the worst affected by the COVID-19 pandemic.

At the time of writing, Ireland had a total of 176,839 total COVID-19 cases and 2,708 related deaths.

While well below the numbers reported from the likes of France, Germany, Italy, and Spain, there is some urgency globally to secure more vaccines.

New strains of the coronavirus have proved significantly more virulent and as a result could have a significant impact on economic conditions.

Germany has already announced an extension to its lockdown. Merkel also talked of a possible need to shut down borders in order to protect the country from new strains.

Without an adequate vaccine supply and vaccination drive, the impact of the new strains could be devastating.

COVID-19 numbers from the UK had certainly sent a warning to neighboring countries over the holidays.

Global Numbers

Leading the charge geographically, by vaccination rate, continues to be Israel.

As at 19th January, Israel had a reported vaccination rate of 29.78 doses per 100, up from 25.91 as at 17th January.

The U.A.E continued to trail Israel in 2nd place, with a rate of 19.21 doses per 100.

Sitting behind Bahrain in 3rd was the UK, with a vaccination rate of 7.07 doses per 100. This was up from 6.45 doses per 100 as at 17th January.

Looking at the numbers, A marked increase in vaccination rates is going to be needed to support a speedier economic recovery.

Further extensions to existing lockdown periods could begin to hit the prospects of a 2nd quarter recovery.

While we see economic divergence globally, stemming from marked differences in vaccination rates, the same is likely within the EU.

For the Eurozone economic outlook, France, Germany, Italy, Spain, and the Netherlands will need to materially ramp up vaccinations.

It will be interesting to see whether the issue is raised during the ECB press conference tomorrow. How does the ECB see growth when considering the divergence in vaccination rates across member states?

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 96,625,755 confirmed COVID-19 cases and 2,065,698 related deaths.

By geography, the U.S had reported 24,806,964 cases and 411,486 COVID-19 related deaths.

India reporting 10,596,442 cases, with Brazil reporting 8,575,742 cases.

Sitting behind Russia (3,612,800) remained the UK (3,466,849).

France (2,938,333), Italy (2,400,598), Spain (2,370,742), and Germany (2,071,473) reported a combined 9,781,146 cases.

Looking Ahead

The AstraZeneca vaccine remains the key to bringing the pandemic under control near-term. This is largely due to an expected abundance of supply.

When considering the current vaccination rates, however, there is one other factor to consider.

Pfizer Inc., Moderna Inc., and AstraZeneca’s vaccines are 2-dose vaccines. This means that another round of vaccines is going to be needed for effective protection against the virus.

When considering current vaccination rates, some of the more adversely affected nations may not be anywhere 50% vaccinated before the 2nd quarter.

This is yet another factor for the markets to consider in terms of any economic recovery.

The availability of a single dose vaccine may not be far off, with Johnson & Johnson set to release data imminently. In all reality, however, supply constraints could limit the availability of a single dose vaccine beyond U.S borders.

Johnson & Johnson Numbers

Johnson & Johnson had previously projected to deliver 12 million doses by the end of February and 100 million doses by the end of June.

According to recent reports, however, Johnson & Johnson may a number of months behind.

That suggests that 1 billion doses by the end of 2021 may also be an ambitious target.

Pfizer Inc., Moderna Inc., AstraZeneca, Sputnik V, and China’s two vaccines will be key near-term. Ultimately, however, it will likely be a single dose vaccine that brings an end to the COVID-19 pandemic.

Availability across the globe is going to be needed, however, for the pandemic to truly come to an end.

As we have seen in the early days of the COVID-19 vaccines, richer nations have cornered much of the vaccine supply.

This will also need to change for the number of new cases across the globe to begin falling.

Inauguration Day and the Bank of Canada Put the Greenback and the Loonie in Focus

Earlier in the Day:

It’s was a relatively busy start to the day on the economic calendar this morning. The Aussie Dollar and the PBoC were in action early this morning.

For the Aussie Dollar

The Westpac Consumer Confidence Index fell by 4.5% to 107.0 in January. In December, the Index had stood at 112.0.

According to the January report,

  • Domestic border closures and COVID-19 clusters together with a sharp rise in new COVID-19 cases overseas weighed on sentiment.
  • In spite of the fall, the index is up by 14.6% from a year ago and stood 41.5% higher than the pandemic low last April.

Looking at the key components:

  • Economic conditions next 12-months slid by 8.3%, with family finances vs a year ago falling by 7.0%.
  • In spite of the decline both were up compared with a year ago.
  • Family finances next 12-months saw a more modest 0.3% decline, with economic conditions next 5-years down by 4.5%.
  • Compared with this time last year, economic conditions next 5-years was up by 31.6%, with economic conditions next 12-months up by 21.1%.
  • Time to buy a major household item was down by 2.8%, while up by 4.8% compared with this time last year.
  • Time to buy a dwelling bucked the trend, however, rising by 0.2%. This was supported by sentiment towards house prices.
  • The House Price Expectations Index increased by 1.1%.
  • Sentiment towards unemployment was disappointing, however. The Unemployment Expectations Index was up by 11.9%, while down by 11.2% compared with a year ago.

The Aussie Dollar moved from $0.77100 to $0.77102 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.21% to $0.7711.

From China

This morning, the PBoC left loan prime rates unchanged in the central bank’s first monetary policy decision of the year.

In line with market expectations, the 1-year LPR remained unchanged at 3.85%, with the 5-year unchanged at 4.65%.

The Aussie Dollar moved from $0.77026 to $0.77072 upon announcement of the decision.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% to ¥103.77 against the U.S Dollar, with the Kiwi Dollar up by 0.04% to $0.7125.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. German wholesale inflation figures for December and finalized December inflation figures for the Eurozone are due out later today.

Barring marked revision from prelim Eurozone inflation figures, we don’t expect the stats to have too much influence, however.

Away from the economic calendar, COVID-19 vaccine news along with the latest COVID-19 figures and Italian politics will provide direction.

At the time of writing, the EUR was up by 0.10% to $1.2141.

For the Pound

It’s a relatively busy day ahead on the economic calendar. December inflation and wholesale inflation figures are due out of the UK later today.

A pickup in inflationary pressures should deliver support for the Pound. Wholesale inflationary pressures will also need to see a pickup, however.

While the stats will influence, the market focus will remain on the UK Government’s progress towards ending the COVID-19 pandemic.

At the time of writing, the Pound was up by 0.12% to $1.3647.

Across the Pond

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats to provide the Greenback and the broader markets with direction.

The lack of stats will leave the Greenback in the hands of chatter from Capitol Hill and COVID-19 news.

It’s Inauguration Day, so expect market focus to be on Capitol Hill. Upon entering the Oval Office, Biden is expected to begin repealing Trump policy.

At the time of writing, the Dollar Spot Index was down by 0.12% to 90.388.

For the Loonie

It’s a busy day on the economic data front. December inflation figures are due out ahead of the Bank of Canada’s first monetary policy decision of the year.

With the markets likely to hold out for the BoC rate statement and press conference, inflation figures will likely have a relatively muted impact on the Loonie.

Rising crude oil prices and optimism towards the economic outlook is likely to leave the BoC in a holding pattern. It remains to be seen, however, whether there’s any hawkish chatter.

At the time of writing, the Loonie was up by 0.11% to C$1.2721 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Crypto Daily – Movers and Shakers – January 20th, 2021

Bitcoin, BTC to USD, fell by 2.17% on Tuesday. Reversing a 2.22% gain from Monday, Bitcoin ended the day at $35,890.0.

It was a mixed start to the day. Bitcoin rose to an early morning high $37,450.0 before hitting reverse.

Falling short of the first major resistance level at $37,889, Bitcoin slid to a mid-morning low $36,299.0.

Steering clear of the first major support level at $35,176, however, Bitcoin rallied to a late afternoon intraday high $37,936.6.

Continuing to fall short of the first major resistance level at $37,889 Bitcoin slid to a final hour intraday low $35,863.0.

In spite of the late sell-off, Bitcoin continued to steer clear of the first major support level at $35,176.

The near-term bullish trend remained intact, in spite of the latest reversal. For the bears, Bitcoin would need to slide through the 62% FIB of $18,504 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was another mixed day on Tuesday.

Binance Coin and Chainlink slid by 6.05% and by 6.79% respectively to lead the way down.

Cardano’s ADA (-1.04%) also saw red on the day.

It was a bullish start to the week for the rest of the majors, however.

Ethereum rallied by 8.70% to lead the way.

Crypto.com Coin (+5.12%), and Ripple’s XRP (+2.87%) also found strong support.

Bitcoin Cash SV (+0.10%), Litecoin (+0.06%) and Polkadot (+0.92%) trailed the front runners, however.

In the current week, the crypto total market cap fell to a Monday low $958.80bn before rising to a Tuesday high $1,080.72bn. At the time of writing, the total market cap stood at $1,029.91bn.

Bitcoin’s dominance rose to a Monday high 67.47% before falling to a Tuesday low 65.20%. At the time of writing, Bitcoin’s dominance stood at 65.65%.

This Morning

At the time of writing, Bitcoin was up by 1.14% to $36,298.6. A mixed start to the day saw Bitcoin fall to an early morning low $35,602.0 before rising to a high $36,353.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was a mixed start to the day.

Binance Coin (-0.33%) and Chainlink (-1.85%) saw red to buck the trend early on, with Bitcoin Cash SV flat.

It was a bullish start for the rest of the majors, however.

At the time of writing, Crypto.com Coin was up by 4.04% to lead the way.

BTCUSD 200121 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to avoid a fall through the pivot level at $36,563 to bring the first major resistance level at $37,263 into play.

Support from the broader market would be needed for Bitcoin to break back through to $37,000 levels.

Barring an extended crypto rally, first major resistance level and Tuesday’s high $37,936.6 would likely cap any upside.

In the event of an extended crypto rally, Bitcoin could test resistance at $40,000 before any pullback. The second major resistance level sits at $38,637.

Failure to avoid a fall through the $36,563 pivot would bring the first major support level at $35,190 into play.

Barring an extended crypto sell-off, Bitcoin should steer clear of sub-$35,000 levels. The second major support level sits at $34,490.

European Equities: COVID-19 and U.S Politics in Focus

Economic Calendar:

Wednesday, 20th January

German PPI (MoM) (Dec)

Eurozone Core CPI (YoY) (Dec) Final

Eurozone CPI (MoM) (Dec) Final

Eurozone CPI (YoY) (Dec) Final

Thursday, 21st January

ECB Interest Rate Decision (Jan)

ECB Press Conference

Eurozone Consumer Confidence (Jan) Prelim

Friday, 22nd January

French Manufacturing PMI (Jan) Prelim

French Services PMI (Jan) Prelim

German Manufacturing PMI (Jan) Prelim

German Services PMI (Jan) Prelim

Eurozone Manufacturing PMI (Jan) Prelim

Eurozone Markit Composite PMI (Jan) Prelim

Eurozone Services PMI (Jan) Prelim

The Majors

It was a bearish day for the European majors on Tuesday. The CAC40 fell by 0.33%, with the DAX30 and EuroStoxx600 seeing losses of 0.24% and 0.19% respectively.

News from Germany of a lockdown extension to mid-February sent the European majors into the red.

In addition to an extended lockdown, the possibility of reintroducing border controls was also raised over concerns of new COVID-19 strains.

Sentiment had been more bullish early on, with a pickup in economic sentiment in Germany and the Eurozone providing support.

The Stats

Economic sentiment figures for Germany and the Eurozone and finalized German inflation figures were in focus.

For January, Germany’s ZEW Economic Sentiment Indicator rose from 55.0 to 61.8, with the current conditions indicator rising from -66.5 to -66.4.

Economists had forecasted an economic sentiment indicator of 60.0 and a current conditions indicator of -68.5.

For the Eurozone, the Economic Sentiment Indicator increased from 54.4 to 58.3.

On the inflation front, consumer prices increased by 0.5% in December in Germany, which was in line with prelim figures. Consumer prices had fallen by 0.8% in November.

According to Destatis,

  • Consumer prices were down by 0.3% on the same month a year earlier.
  • A temporary reduction in value added tax contributed to the fall in consumer prices.
  • Energy product prices slid by 4.8%. Prices had risen by 1.4% in 2019.
  • Prices of goods were down by 0.4% on 2019, while prices of services rose by 1.3%.

From the U.S

There were no material from the U.S.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Tuesday. Volkswagen rose by 0.81% to buck the trend on the day. BMW and Daimler fell by 0.95% and by 1.22% respectively, while Continental saw more modest loss of 0.59%.

It was a mixed day for the banks, however. Deutsche Bank slid by 3.90%, while Commerzbank rose by 0.14%.

From the CAC, it was a bearish day for the banks. BNP Paribas fell by 1.55%, with Credit Agricole and Soc Gen sliding by 2.24% and by 2.39% respectively.

It was a mixed day for the French auto sector. Peugeot ended the day flat, while Renault fell by 1.30%.

Air France-KLM fell by 0.72%, while Airbus SE ended the day with a modest 0.12% gain.

On the VIX Index

It was back into the red for the VIX on Tuesday. Reversing a 4.69% gain from Friday, the VIX fell by 4.52% to end the day at 23.24. On Monday, the U.S markets had been closed.

The NASDAQ rallied by 1.53%, with the Dow and the S&P500 rising by 0.0.38% and by 0.81% respectively.

Support for more fiscal stimulus delivered support to the U.S markets after the Monday holiday.

Former FED Chair Yellen, nominee for Treasury Secretary talked of support for a sizeable fiscal stimulus package.

Coupled with the incoming administration’s plans to drive vaccinations, hopes of a speedier economic recovery drove the main indexes to fresh record highs.

VIX 200121 Daily Chart

The Day Ahead

It’s a quiet day on the economic calendar. Inflation figures from Germany and the Eurozone are due out later today.

We don’t expect the numbers to have any material impact on the European majors, however.

It’s Inauguration Day, so expect Biden’s immediate plans upon taking office to be the main area of focus.

Yellen’s support for further economic stimulus should deliver some comfort going into the open.

COVID-19 news will also continue to influence, however.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 46 points.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Market Overview – Stock Rally Led by Energy and Technology

U.S. stocks moved higher on Tuesday, led by gains in the Nasdaq. Growth and value were both strong. Most S&P 500 index sectors were higher, led by gains in energy and technology, real-estate bucked the trend. Janet Yellen was on the hill testifying for her confirmation hearing in front of the senate. She said she would focus on the American worker if confirmed. U.S. Yields moved lower along with the dollar as crude oil prices moved higher. Netflix reported after the closing bell, beating expectations on the top and bottom line. The stock immediately popped more than 5%. The company said in a statement that they no longer will need to raise capital by external financing. Money will now go to stock buybacks. Goldman Sachs reported financial results before the opening bell. Gains in trading and investment banking drove the better than expected top and bottom line.

Yellen Hearing to Be Treasury Secretary was Held on Tuesday

Janet Yellen told lawmakers she would make the needs of America’s workers her core focus if confirmed as the next U.S. Treasury secretary. The former Chair of the Federal Reserve said that she would ensure the U.S. has a competitive economy that offers good jobs and wages workers in cities and rural areas.

Goldman Reported Better than Expected Results

Goldman Sach reported a profit of $4.51 billion in the Q4 or $12.08 per share, which was more than double Goldman’s profit from the same quarter a year ago. Both quarterly net income and quarterly revenue of $11.74 billion were much better than the expectations of of $7.39 a share on revenue of $9.99 billion.

Pepperstone Expands Its global Operations With Five New Licenses Around The World.

Find out more about Pepperstone’s range of instruments and markets available to traders at https://pepperstone.com/en-af or https://pepperstone.com/en-ae/

Pepperstone was first established in 2010 in Australia, where it received multiple awards from the notable Investment Trends for customer service, spreads and support. In 2019, Pepperstone was rated number one for overall client satisfaction and platform features.

As one of the largest MetaTrader brokers in the world, Pepperstone’s vision is a world of digitally-enabled trading for traders to embrace the challenge and opportunity of global markets. The financial technology company has more than doubled in size over the past 12 months in line with its growth targets, expanding and tailoring its product offering into hundreds of new markets including Germany, Cyprus, The Bahamas, Dubai and Kenya

“Nairobi and Dubai are exciting financial hubs and we look forward to continuing to strengthen our product offering, delivering exceptional pricing and building on our already strong relationships with our Middle East and African traders and partners” – said Tamas Szabo, Group CEO of Pepperstone

The broker’s commitment to compliance and regulation sees it licensed in ASIC, FCA, DFSA, SCB, CySec, BaFin and CMA, a total of seven licenses in multiple jurisdictions.

About Pepperstone

Established in 2010, Pepperstone is now one of the largest MT4 brokers in the world. The company has subsidiaries across the globe and holds licenses issued by the Australian Securities and Investments Commission (ASIC), the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the Dubai Financial Services Authority (DFSA), the Capital Markets Authority of Kenya (CMA), and the Securities Commission of The Bahamas (SCB).