Original insights into market moving news

[PODCAST] European Open Rundown 16th February 2021

  • Asian equity markets traded higher across the board as markets picked up from the holiday lull
  • Some gains for regional bourses and US equity futures were later reversed after reports that China is mulling curbs on rare earth metals exports, targeting the US defense sector
  • BoJ's Kuroda stated that the Bank will not end nor seek an exit from ETF purchases for the time being
  • In FX, the USD remained subdued, EUR/USD was capped by 1.2150 and GBP/USD remains firmly on a 1.39 handle
  • The winter storm stateside has forced some of the largest US refineries to shut operations
  • Looking ahead, highlights include German ZEW, Eurozone Employment, GDP, NY Fed Manufacturing, Japanese Trade, Fed's Daly, supply from the UK


US COVID-19 cases increased by at least 53,789 to 27.77mln and deaths increased by at least 1,019 to 486.7k, according to a major newswire tally. (Newswires)

WHO said the AstraZeneca (AZN LN) COVID-19 vaccine has been approved for emergency use. (Newswires)

UK PM Johnson said we do not have sufficient clarity on the data yet for what we can say next week and that the virus remains a real threat with the infection level still very high, while he intends for this lockdown to be the last but also noted that there will be some people who will not benefit from the vaccine as they are less than 100% effective. Furthermore, PM Johnson commented on vaccine passports in which he stated that domestically, we will be relying on mass vaccination and rapid on-the-day testing. (Newswires)

Novavax (NVAX) announced expanded collaboration and license agreement with SK Bioscience for the production of 40mln doses of its COVID-19 vaccine for South Korea. In relevant news, South Korea PM Chung stated that the government reached agreements to acquire additional COVID-19 vaccines for 23mln people. (Newswires) Novavax (NVAX) is close to enrolling the 30k participants necessary for their US trial, says CEO Erck; adding, that the FDA is considering approving the COVID-19 vaccine candidate based on UK trial data which is already available. However, this is yet to be confirmed and for context the FDA denied a similar request for AstraZeneca’s candidate. (FT)

Western Australia Premier Andrews warned they are ready to extend the lockdown which is set to finish tomorrow and stated they will not make an announcement on easing of restrictions till then with the next 24 hours crucial, while reports noted that a resumption of flights was already postponed. (FT)


Asian equity markets traded higher across the board to extend on Monday’s gains amid a lack of any major changes on the macro front and as trade continued to pick up from the holiday lull caused by the Lunar New Year/Spring Festival holidays in China and Presidents’ Day stateside. ASX 200 (+0.6%) was positive with the index led by cyclicals and with miners encouraged after BHP results in which the mining giant reported an increase in H1 underlying net and revenue, as well as declared a record interim dividend. Big 4 bank NAB was also kept afloat despite flat results with Q1 cash earnings inline with the previous year, although this was still 47% higher than the quarterly average during first 6 months of 2020 and it noted a 96% decline in credit impairment charges. Nikkei 225 (+1.2%) added to its highest levels in more than three decades as exporters cheered a weaker currency and with BoJ Governor Kuroda sticking to the dovish script in which he affirmed that ETF purchases are part of the monetary easing program and that the BoJ will not end nor seek an exit from ETF purchases for the time being. Hang Seng (+1.3%) was jubilant on return from the holiday closures with notable advances in the blue-chip energy stocks as they played catch up to the continued ascent in oil prices and with financials also bolstered by the rising yield environment and due to some expectations HSBC could resume dividends following next week’s board meeting, while IMAX China shares rocketed over 30% after China’s box office revenue reached CNY 5bln during the first 3 days of the Spring Festival holidays. However, some of the gains for the regional bourses and US equity futures were later reversed in late trade after reports that China is mulling curbs on rare earth metals exports, targeting the US defense sector. Finally, 10yr JGBs were lacklustre amid the gains in stocks and follows recent pressure in T-note futures as the US 10yr yield rose higher by as much as 5bps to briefly touch 1.25% and the US 30yr yield extended further above 2.00%, while weaker results at the 5yr JGB auction also dragged the 10yr benchmark to beneath 151.50 and saw its respective yield increase to 8bps which is the highest in almost a year.

BoJ Governor Kuroda said the BoJ will continue current monetary policy to support the economy and that the virus is having a major effect on both domestic and overseas economies. Kuroda also stated that buying ETFs are part of the monetary easing program and the BoJ will not end nor seek an exit from such purchases for the time being, while he added there is still very high uncertainty over economic outlook. (Newswires)

China is reportedly mulling curbs on rare earth metals exports targeting the US defense sector. (FT)


Eurogroup President Donohoe said economic policies should stay in place for as long as needed and that national budgets should be approached in a coordinated manner in which they want a common approach on the budgetary stance by summer. Donohoe added that there will be a move to more targeted support measures for firms as the recovery phase is kicking in but also noted that some businesses will not be viable in the longer-term and there will be more discussions on which firms will be viable in April. (Newswires)


In FX markets, the DXY was subdued with havens shunned as the positive risk momentum persisted. Portions of the US experienced disruptions due to the winter storm especially in central and southern states with millions in Texas suffering from power outages, although the pressure in the greenback was somewhat cushioned by the rising US yields. EUR/USD took advantage of the USD weakness but with advances in the single currency contained by resistance around the 1.2150 level, while GBP/USD outperformed after the 1.3900 level provided a springboard for the pair which then traded at its highest since April 2018 despite PM Johnson tempering some expectations for exiting lockdown restrictions in which he noted the plan will include target dates for changes but warned of potential delays from high level of infections. USD/JPY was underpinned by the heightened risk appetite and rose above 105.50 level as it breached a cluster of nearby key MA levels including the 200DMA of 105.49, while antipodeans were also supported by the risk tone and with the RBA minutes refraining from any curve balls for the market as it mostly reiterated the central bank’s statement of keeping the Cash Rate at 0.10% for as long as necessary and that it does not expect to reach targets for unemployment and inflation until 2024 at the earliest. However, currencies later pared the moves in late trade after reports that China is mulling curbs on rare earth metals exports targeting the US defense sector which subsequently weakened CNH.

RBA minutes from the February meeting stated very significant monetary support is to be required for some time and the cash rate will be kept at 0.10% for as long as necessary, while it will not increase that cash rate until inflation is sustainably within 2%-3% target and it does not expect to reach targets for unemployment and inflation until 2024 at the earliest. Furthermore, the Board concluded that ending bond purchases would result to significant upward pressure for AUD and the currency is notably lower than it would have been in the absence of the November stimulus package. (Newswires)

Australian Bureau of Statistics said total payroll jobs during January 16th-30th rose 1.3% vs prev. 1.3% and wages rose 0.4% vs prev. 1.3%. (Newswires)


Commodities held on to Monday's gains with WTI crude futures sitting above the USD 60/bbl level as the energy complex was underpinned by the positive risk appetite and the winter storm stateside which severely impacted Texas where millions experienced power outages and forced some of the largest US refineries to shut operations. Conversely, a shutdown of major oil and gas fields in Norway was averted after a wage union agreement, while participants will have to wait an extra day for the latest energy inventory reports with the private sector stockpile data not scheduled until Wednesday due to the Presidents' Day holiday. Elsewhere, gold saw marginal gains amid the weaker greenback but with upside limited by the lack of haven demand and copper extended on its advances with LME prices at their highest since August 2012 as a tight supply outlook and constructive risk tone continued to provide tailwinds.

Motiva announced to shut its Port Arthur, Texas refinery (637k BPD) due to freezing temperatures in Texas, while ExxonMobil is shutting in Baytown, Texas refinery (584k bpd) and chemical plant complex due to the weather. It was also reported that Valero is shutting its Port Arthur, Texas refinery (250k bpd), while Colonial Pipeline noted it is continuing operation of its system with currently no significant impact on its operations due to the adverse weather. (Newswires)

A winter storm warning has now been issued for the entirety of North Texas. (WFAA)

Norway's SAFE labour union agreed a wage deal for Mongstad Port workers to avert a shutdown of major oil and gas fields. (Newswires)

Kazakhstan Energy Minister said they exported 5.5mln tons of oil and produced 7.01mln tons of oil in January, while they plan to produce 83.4mln tons of oil this year. (Newswires/Twitter)


Rockets were fired near Erbil Airport in the Kurdistan Region of Iraq which was reportedly indirect fire on US-led coalition forces, while the US military confirmed that a contractor was killed in the attack and several were injured. US Secretary of State Blinken later stated that the US is outraged by the attack and has reached out to the Kurdistan Regional Government PM to discuss the attack, as well as pledged support for an investigation and vowed to hold accountable those that were responsible. (Newswires/AFP)


US markets were closed on Monday for Presidents’ Day.