No Follow-Through Dollar Buying After Yesterday's Recovery: Consolidative Session Likely

Overview: The poor price action in North America yesterday failed to spur much knock-on effect today. That said, US participants may remain on edge as Georgia votes today which will greatly impact the shape of the Biden agenda. The MSCI Asia Pacific Index extended its advance for an eighth consecutive session, and European shares are little changed, caught between rising energy and falling utilities.US shares are firm. Bond yields have edged up 1-2 bp in Europe and the US but were lower in the Asia Pacific region. The dollar is softer, with the Antipodeans and Swedish krona leading. Sterling, where England and Scotland are imposing new nationwide lockdowns, is a laggard. Emerging market currencies are mixed, and the JP Morgan Emerging Market Currency Index is giving back a fraction of yesterday's 0.5% gain. Gold is pushing toward $1950 after briefly dipping below $1935 in early Asian turnover. Oil steadied as the OPEC+ meeting is continuing today, and most reportedly do not favor an increase in output next month. After approaching $50 a barrel yesterday, February WTI found support ahead of $47 a barrel and has been bid back above $48 in Europe.  

Asia Pacific

It appears that the US authorities have given greater guidance to the NYSE, and it has retracted its decision to de-list China's three-largest telecom companies. This is an unexpected reversal that saw their shares rally in Hong Kong and China as several oil companies that were thought to be next.  

The global competition over semiconductor chip fabrication intensified last year, and the industry appears to be in flux, with M&A activity and some users, like Apple, deciding to produce their own. One of the leading producers, Taiwan Semiconductor Manufacturing Company (TSCM), signaled that it would spend $22 bln on CAPEX this year, 10% more than anticipated. Taiwan's information technology sector (~1.2%) lifted Taiex higher (0.65%) today. 

The second-largest daily increase in Covid cases in Tokyo is ratcheting up pressure on Prime Minister Suga to declare another state of emergency for Tokyo and three other prefectures. Reports suggest a decision will likely be made on Thursday. Japanese stocks had rallied into the year-end, but the prospect of new social distancing and a state of emergency has spurred some profit-taking, and the Nikkei is off a little more than 1% between yesterday and today. 

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Read more by Marc on his site Marc to Market.

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