THE greenback took a heavy beating in the course of the week in
THE greenback took a heavy beating in the course of the week in assessment, down 1.17% to 90.71 – hitting its lowest stage since April 2018.
The promoting strain was pushed by the next buyers’ threat urge for food fuelled by rising optimism on the concept a worldwide vaccination marketing campaign might come as quickly as end-2020.
Moreover, rumours of additional US stimulus and prospect of a powerful rebound within the financial exercise as evidenced by a slew of knowledge releases this week saved the general sentiment buoyant.
Nonetheless, market gamers grew slightly extra cautious in the direction of the top of the week following considerations round US day by day Covid-19 deaths which have surpassed the spring peak, whereas hospitalisations are surging with Los Angeles imposing a stay-at-home order.
Nonetheless, key information releases for the week embody: Markit’s November manufacturing PMI got here as anticipated at 56.7 – the best in two years versus 53.Four in October; and Markit companies PMI got here in higher than anticipated at 58.Four in November from 56.9 in October (consensus: 57.7) – the steepest growth since March 2015.
Crude oil costs closed larger with Brent gaining 1.10% week-on-week to US$48.71 per barrel – hovering at a nine-month excessive following Britain’s approval of a Covid-19 vaccine which boosted hopes for a requirement restoration.
Individually, Opec+ agreed to extend manufacturing by 500,00Zero barrels per day starting January. This may convey the full manufacturing cuts in the beginning of 2021 to 7.2 million bpd.
The euro obtained a stable dose of impetus from the broad weakening of the greenback, recording a 1.51% achieve for the week to a two-year excessive of 1.21. Apparently, ECB officers have been mum on the euro’s positive factors above the 1.20 ranges which successfully gave buyers the arrogance to push slightly tougher on the foreign money.
Nevertheless, the continued financial restoration momentum within the bloc is shedding momentum following information on Germany extending extra restriction; and November EU Markit Composite PMI deteriorated to 45.Three from 50.Zero in October – the worst contraction within the eurozone’s personal sector economic system since Could with the companies sector being the toughest hit. Nevertheless, corporations remained optimistic following the latest Covid-19 vaccine growth.
The pound sterling was on a rollercoaster experience however managed to complete robust within the week, up 1.04% to 1.35 largely because of the weaker greenback.
Nonetheless, some Brexit hopes supported some flows to the pound with EU diplomats saying they hoped a Brexit commerce take care of Britain might be agreed on by the weekend. In one other word, the UK authorised Pfizer/BioNTech’s Covid-19 vaccine forward of the remainder of the world within the race to start probably the most essential mass inoculation programme in historical past. The yen garnered a good achieve of 0.24% to 103.8 – the strongest in 9 days benefiting from the weaker greenback.
Nevertheless, home growth appeared to look much less rosy within the close to time period after the Osaka prefectural authorities on Thursday signalled a “purple mild” over the Covid-19 state of affairs and requested residents to keep away from going out for non-essential causes from Friday until Dec 15.
Nearly all of the Asia ex-Japan currencies strengthened in opposition to the greenback besides the rupiah and ringgit.
The South Korean gained outperformed its regional friends, up 0.63% to 1,097 – the best since June 2018, adopted by the Taiwanese greenback at 0.57% to 28.37 and Chinese language yuan, strengthening by 0.54% to six.54 – the strongest in two weeks.
The ringgit underperformed beneath the week in assessment, down 0.11% to 4.07 resulting from early week promoting strain in tandem with crude oil costs. In the meantime, November’s Markit manufacturing PMI contracted additional to 48.Four from 48.5 in October.
US Treasuries (UST) Market
The US Treasury yield continued to bear steepen round 3bps–8bps whereas the two-year yield fell 0.4bps.
The carefully watched 10-year yield rose 6.9bps week-on-week to 0.906% albeit briefly touching a two-week excessive of the 0.96% ranges.
The optimism on vaccine growth, added with wholesome financial information launch led to buyers lightening their place on protected haven belongings.
Nevertheless, UST costs firmed forward of the US November labour market information scheduled to be launched on Friday as buyers search clues from the info on the place the coronavirus-battered economic system is headed.
As at midday Friday, the 2-, 5-, 10- and 30-year benchmark UST yields stood at 0.15%, 0.39%, 0.91% and 1.65%, respectively.
Malaysian Bond Market
The promoting within the MGS market continued as market gamers continued to chop their threat and take a defensive stance in view of the excessive chance of the EPF needing to dump belongings to fund withdrawals in Account 1.
Nevertheless, cut price looking emerged because the curve cheapened. Shopping for
flows have been seen throughout the curve and liquidity within the secondary market improved.
As at midday Friday, the 3-, 5-, 7-, 10-, 15-, 20- and 30-year benchmark MGS yields settled at 1.89%, 2.15%, 2.53%, 2.73%, 3.32%, 3.57% and 4.04%, respectively.
Actions within the govvies section elevated 23% week-on-week to RM18.7bil from final week’s RM15.2bil. The MGS section expanded 43% to RM11.8bil from RM8.2bil within the earlier week.
The GII shaved off 8% to RM6.0bil from RM6.6bil.
In the meantime, the short-term invoice’s (MTB/MITB) buying and selling was larger by 94% week-on-week to RM0.9bil from RM0.5bil.
Secondary commerce quantity fell in the course of the week in assessment, down 23% to RM1.0bil from RM1.3bil within the earlier week. The credit score unfold narrowed by 20.6bps on common throughout the curve. The shorter finish rose 23.2bps on common whereas each the stomach and longer ends of the curve eased averagely by 50.2bps and 30.5bps, respectively.
Ringgit Curiosity Fee Swap (IRS) Market
The IRS was seen easing 0.4bps on common throughout the curve. The three-month Klibor stood at 1.93%. Elsewhere, the five-year CDS slipped 15.7% w/w to 35.25bps.
Malaysian Fairness Market
Through the week (Nov 27–Dec 3), the FBM KLCI added 16.15 factors or 1.00% to 1,628.26 factors, according to the constructive development in each the Dow Jones Industrial Common (+0.32%) and MSCI Rising Markets Index (+0.80%). Globally, buyers pinned their hopes on a possible US$908bil reduction package deal in the USA.
The market sentiment was additionally boosted by the submitting for emergency use approval for numerous Covid-19 vaccines in the USA and Europe, in addition to the settlement of Opec+ to increase its output cuts (with minor changes) a minimum of until January 2021. Regionally, buyers scooped up shares throughout all sectors aside from glove.
International buyers bought RM628.2mil value of Malaysian equities, bringing the year-to-date internet outflow to RM23.9bil.
Native institutional and retail buyers continued to dominate the market with a participation price of 44.9% and 38.9% in December respectively (in contrast with 45.2% and 38.4% in November). As international buyers stayed passive, their participation price remained low at 16.2% in December (comparatively unchanged in contrast with 16.4% in November).
In the meantime, international buyers piled into Malaysia Authorities Securities (MGS) for a sixth straight month with a internet influx of RM3.9bil in October 2020 (vs RM1.4bil in September). 12 months-to-date, international buyers have been internet consumers of MGS with a complete internet influx of RM9.3bil.
Fairness buying and selling actions improved with the common day by day worth traded (ADVT) rising to RM5.6bil in December (vs RM5.2bil in November), whereas turnover velocity elevated to 78.2% in December (vs 74% in November).
Through the week, all 13 sectors in Bursa Malaysia ended within the constructive territory. The perfect performing sector was Power (+8.2%) pushed by larger crude oil value on optimism on world financial restoration.
The worst performing sector was healthcare (+0.2%) weighed down by the information on a key glove maker doubtlessly dealing with costs for flouting a staff’ housing act.
Within the coming week, buyers will maintain an in depth eye on:
> Japan GDP (Q3) on Dec 7;
> Eurozone GDP (Q3) on Dec 8;
> ECB rate of interest determination on Dec 10;> US core CPI (November ) on Dec 10;
>Malaysia industrial manufacturing (October) on Dec 11.
For enquiries, contact [email protected] or [email protected]