Original insights into market moving news

[PODCAST] European Open Rundown 4th January 2021

  • Asian equity markets began 2021 mostly higher while US equity futures traded indecisively after stalling at record levels
  • Chinese Caixin Manufacturing PMI fell short of estimates but still printed an 8th consecutive month in expansionary territory
  • UK PM Johnson has warned that tougher lockdown restrictions might have to be considered; UK begins rollout of the AstraZeneca vaccine today
  • In FX, the DXY initially softened in a continuation of last year’s underperformance; EUR/USD hovers around 1.2250, GBP/USD eyes 1.37
  • OPEC+ producers will conduct a videoconference today to decide on production levels for February with the meeting expected to take place at 14:00GMT
  • US President Trump was recorded on audio tape pressuring the Georgia Secretary of State to find enough votes to overturn the result of the Georgia presidential election
  • Looking ahead, highlights include Final EZ, UK and US manufacturing PMIs, Fed's Bostic, Evans, Mester


US CDC reported total COVID-19 cases rose to 20.35mln from 20.06mln and total deaths rose to 349.2k from 346.9k.(Newswires)

NIH’s Dr. Fauci said it is possible that COVID-19 vaccines will become mandatory in order to travel to other countries or attend school. (New York Post)

UK COVID-19 cases +54,990 (prev. +57,725) and deaths +454 (prev. +445), France cases +12,469 (prev. +3,466) and deaths +116 (prev. +157), Italy cases +14,245 (prev. +11,831) and deaths +347 (prev. +364). (Newswires)

UK PM Johnson said we need to see if tier 4 extra restrictions work in lowering infections and that there are a range of tougher measures we may have to consider. PM Johnson also commented that stricter lockdown restrictions for England including school closures will probably be required as cases of the new COVID-19 variant continue to surge. (Newswires)

England’s chief medical officer warned that COVID-19 vaccine shortages will be a problem for months as the government faced a revolt by GPs over cancelled second jabs for elderly patients, although other reports later noted that drug manufacturers hit back at claims by ministers regarding vaccine shortages. 2mln doses of the Oxford-AstraZeneca (AZN LN) vaccine are due to be supplied each week by the middle of this month as pressure builds on the government to speed up immunisations, although reports later noted that the NHS has refrained from committing to deliver 2mln COVID-19 vaccine jabs per week. (Times/Telegraph)

German Health Minister Spahn wants to extend the country’s COVID-19 restrictions beyond January 10th as infection rates remain too high. (RTL)

Irish PM Martin said that Ireland will revert to Level 5 restrictions for a minimum of a month in an effort curb the spread. (Sky News)

Greece announced a one-week strict COVID-19 lockdown beginning on Sunday, in an effort to ease the pressure on the health system. (Politico)

Norway PM Solberg noted concern regarding infection developments and that they are seeing more signs of a new wave of the virus, while she announced that Norway will impose fresh restrictions including a nationwide ban on serving alcohol in bars and restaurants for 2 weeks and for people to not invite guests at home. (Newswires)

Shenyang in northeast China suspended schools and closed businesses in areas where 100,000 people were told to stay home, after the city reported three new COVID-19 cases. (Global Times)

The governors of Tokyo and three neighbouring prefectures called for the national government to declare a state of emergency to address surging COVID-19 infections, while there were separate comments from Economic Minister Nishimura that the government would need to hear from experts prior to deciding on an emergency declaration. Furthermore, it was later reported that Japan is to declare a state of emergency for Tokyo and 3 surrounding prefectures as soon as this week and that the government is mulling a 1-month state of emergency on January 9th. (Newswires/Nikkei)

South Korea will widen the ban on private gatherings larger than four people nationwide and will extend social distancing rules in Seoul and neighbouring areas until January 17th. (Newswires)

Several prominent health leaders and academics in South Africa are calling for President Ramaphosa to fire those responsible for the delay in procuring COVID-19 vaccines which they fear could result in thousands of deaths and further damage the economy. There were also comments from South Africa’s Health Minister that he hopes vaccines will be received as early as February and that talks have been held regarding vaccines from China and Russia. (Newswires)


Asian equity markets began 2021 mostly higher while US equity futures traded indecisively after stalling at record levels as participants returned from the New Year’s holiday and heading into this week’s key risk events including the Georgia Senate runoffs on Tuesday, FOMC Minutes on Wednesday and NFP jobs data on Friday. ASX 200 (+1.5%) was led higher by outperformance in metal stocks as gold miners were underpinned after the precious metal surged above the USD 1900/oz level and with the top-weighted financials sector also notching firm gains. Nikkei 225 (-0.7%) began positive but then faltered on reports that Japan could announce a state of emergency for Tokyo and surrounding prefectures as soon as this week after their governors requested such action to stem surging COVID-19 infections, while Japan and Tokyo are to ask restaurants to close no later than 20:00 local time as part of measures to address the virus. KOSPI (+2.4%) outperformed with index heavyweight Samsung Electronics posting fresh all-time highs and after better-than-expected trade data which showed all components topped estimates including the fastest growth in exports in more than two years. Hang Seng (+0.6%) and Shanghai Comp. (+0.7%) were positive but with early jitters seen after the recent announcement by NYSE to delist China Mobile, China Telecom and China Unicom following US President Trump’s executive order in November banning investment in companies with ties to the Chinese military, which prompted threats of countermeasures from MOFCOM and large Chinese oil names felt the pressure on speculation that they could be next in the firing line. Furthermore, participants digested the latest Chinese Caixin Manufacturing PMI which fell short of estimates but still printed an 8th consecutive month in expansionary territory and there were also reports that China’s Foreign Minister Wang Yi extended an olive branch to the incoming Biden administration and suggested that a new window of hope is opening. Finally, 10yr JGBs were rangebound with initial upside stalled by resistance near the psychological 152.00 level and with price action contained amid the absence of BoJ purchases in the market today.

PBoC injected CNY 20bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 140bln. (Newswires) PBoC set USD/CNY mid-point at 6.5408 vs exp. 6.5444 (prev. 6.5249)

Chinese President Xi commented in his New Year Speech that he expects China’s 2020 GDP to exceed CNY 100tln and that China was the first among major economies to have positive growth, while he also stated that China put people and life first in fighting against the pandemic. Furthermore, he reiterated that China will further deepen reform and boost opening up. (Newswires)

China’s Foreign Minister Wang Yi reportedly extended an olive branch to the incoming Biden administration in which he stated that a new window of hope is opening and urged the Biden administration to adopt a sensible approach, as well as restart engagement with China to get bilateral ties back on track. (SCMP)

PBoC and four ministries reportedly decided to extend the maturity of direct monetary policy tools for three months to end-March following instructions by the State Council. (Twitter)

NYSE announced to delist China Mobile (941 HK), China Telecom (728 HK) and China Unicom (762 HK) following US President Trump’s executive order in November banning investment in companies with ties to Chinese military. Following the decision, China’s MOFCOM responded that it will take “necessary measures” to the recent delisting of the three Chinese telecom firms. (Newswires)

China said it would take necessary measures to safeguard its sovereignty as it warned against the British Navy deploying its latest aircraft carrier HMS Queen Elizabeth to the South China Sea. (SCMP)

  • Chinese Caixin Manufacturing PMI (Dec) 53.0 vs. Exp. 54.8 (Prev. 54.9); 8th consecutive monthly expansion.
  • South Korea Trade Balance (USD)(Dec) 6.94B vs exp. 6.20B (prev. 5.90B)
  • South Korea Exports (Dec) Y/Y 12.6% vs exp. 6.3% (prev. 4.0%); fastest growth since October 2018.
  • South Korea Imports (Dec) Y/Y 1.8% vs exp. -2.8% (prev. -2.1%)


The Brexit transition period ended and the UK-EU trade deal took effect after the negotiators from both sides of the Channel reached an agreement late last month for an unprecedented 100% tariff liberalisation on goods, although this doesn’t apply to services and the UK financial industry will no longer have blanket access to the single market. Furthermore, UK Parliament passed the trade deal which was signed into law by the Queen, while EU ambassadors approved its provisional application prior to ratification by the European Parliament by end-Feb. (Newswires)

UK government will begin urgent discussions in the week ahead to try and reach an agreement by March to give the country’s financial services firms access to EU financial markets. There were also separate reports that Italy is providing UK finance firms a grace period of six months in which they can await authorisation to conduct business in the country as non-EU companies. (Newswires/CITY A.M.)

UK PM Johnson is seen to be on track to lose his own seat and both main political parties are unlikely to achieve a majority at the next general election due in 2024, according to a new Focaldata poll. (Newswires/Sunday Times)

ECB's Knot said what helps is that interest rates are low which will remain so for the time being although the most important thing is that there is sufficient economic growth, while he suggested this will increase income and make debt more affordable. Furthermore, he added that thanks to this favourable financial position, the Dutch government can support the economy. (Newswires)


In FX markets, the DXY initially softened in a continuation of last year’s underperformance among the major currencies in which it dropped around 7% throughout 2020, while upcoming risk events including the Senate runoff in Georgia, FOMC Minutes and NFP data contributed to the lack of demand for the greenback. EUR/USD benefitted from the USD weakness with the single currency trading around 1.2250 and GBP/USD marginally extended on last week’s gains following the end of the Brexit transition period and with the EU–UK Trade and Cooperation Agreement now in effect. However, the gains in GBP were limited as focus turns to negotiations regarding the UK financial services industry which no longer has blanket access to the single market, while potential tougher COVID-19 restrictions for England also restricted upside for the currency. USD/JPY reversed opening gains and tested 103.00 to the downside as the risk tone in Japan soured due to a potential state of emergency declaration for Tokyo and surrounding areas, while antipodeans took advantage of the USD woes and upside in commodities which helped NZD/USD briefly reclaim 0.7200 status before retracing the moves as the greenback eventually nursed losses.

CBRT Minutes stated that they decided to implement strong monetary tightening policy taking into account their end-2021 forecast target, which followed their decision to hike the one-week repo target by 200bps to 17% on Christmas Eve. (Newswires)

China adjusted the currency weighting in the CFETS RMB Index whereby it cut the USD weighting and increased the EUR weighting. (Newswires)


WTI crude futures shrugged off the early indecision and rose above the 49.00/bbl level amid the mostly positive sentiment in Asia and following comments from OPEC Secretary-General Barkindo who stated that OPEC+ stands ready to adjust a gradual return of 2mln bpd to the market depending on conditions and that vaccinations provide potential upside for the economic outlook but also noted there were many downside risks to juggle in H1. Nonetheless, focus for the complex remains centred on the groups videoconference later today (1400GMT) where producers will decide on next month's production levels and with Russia favouring a further output hike of 500k bpd. Elsewhere, gold advanced after it gapped above the USD 1900/oz level with the precious metal underpinned by early USD weakness and copper prices gained in tandem with upside in commodities and the mostly constructive risk tone.

OPEC Secretary-General Barkindo stated OPEC+ stands ready to adjust a gradual return of 2mln bpd to the market depending on market conditions and developments, while he stated that global crude oil demand will increase to 95.9mln bpd this year or by 5.9mln from 2020. Barkindo commented that vaccinations provide potential upside for the economic outlook and that a strong rebound is possible in H2 this year but also noted that the outlook for H1 is very mixed with many downside risks to juggle. Furthermore, he stated it is too soon to tell how quickly key sectors will rebound to pre-pandemic levels even with the vaccines and that it could be another couple of years before travel, tourism, hospitality and leisure return to pre-COVID levels, while he added that oil inventory levels show positive momentum but remain stubbornly elevated. (Newswires)

OPEC+ producers will conduct a videoconference on Monday to decide on production levels for February with the meeting expected to take place at 14:00GMT. (Newswires)


US acting Secretary of Defense Miller ordered USS Nimitz to halt its redeployment and said the aircraft carrier is no longer leaving the Middle East due to Iran's recent threats against President Trump and other government officials. (Twitter)

US President-elect Biden's incoming National Security Adviser Sullivan said the new administration would move quickly to renew the last remaining major nuclear arms treaty with Russia even as it seeks to punish the latter for hacking US government networks, while he added that Biden plans to pursue a “follow-on negotiation” with Iran regarding missile capabilities if Tehran re-enters compliance with the nuclear deal. (New York Times)

Iran’s Foreign Minister Zarif tweeted that new intelligence from Iraq indicated that Israeli agent-provocateurs are plotting attacks against Americans—putting an outgoing Trump in a bind with a fake event that used to provoke or justify war. (Newswires)

Iran informed the IAEA it is planning to enrich uranium up to 20% purity at the Fordow nuclear site. (Newswires)

UAE arrested Iranian nationals in Abu Dhabi and Dubai it said were planning terror attacks in the country, according to Israeli TV. (Channel 12)


US Senate voted 81-13 on Friday to override President Trump’s veto of the NDAA defense bill which follows similar action by the House earlier last week, while President Trump later tweeted that the Republicans should have gotten rid of Section 230 in the bill. (Newswires)

US President Trump was recorded on audio tape to have pressured the Georgia Secretary of State to find enough votes to overturn the result of the Georgia presidential election which was won by President-elect Biden. (Newswires)

A group of 11 Republican Senators and Senators-elect issued a joint statement confirming that they will raise objections during the Congressional review of the Electoral College vote on January 6th and called for an emergency 10-day audit of the results. Furthermore, Senator Ted Cruz and others said they will not certify the election results on January 6th without the investigation into voter fraud. (Newswires/Axios)

Over 3mln have already casted their votes prior to Tuesday’s Georgia runoff races, while data showed that Democrats have an advantage in early voting turnout in Georgia although Republicans generally see higher Election Day turnout. Furthermore, a FiveThirtyEight poll showed that Democrat candidate Ossoff leads Republican Senator Perdue in the regular Senate election race at 49.2% vs. 47.4% and Democrat candidate Warnock leads Republican Senator Loeffler in the special Senate election race at 49.5% vs. 47.2%. (Newswires)

US House Speaker Pelosi was re-elected as Speaker of the US House of Representatives. (Newswires)