Original insights into market moving news

[PODCAST] US Open Rundown 25th March 2021

  • European equity indices have recovered off worst levels while US futures consolidate, with the NQ narrowly outperforming
  • Dollar has traded choppy; JPY has been trailing behind and is only just above the 109.00 handle; FX eyes sizeable OpEx
  • SNB kept policy rate unchanged at 0.75%; CHF classification reaffirmed as “highly valued” and reiterates the willingness to intervene in FX if necessary, but removes 'more strongly' phrasing
  • AstraZeneca announced positive primary analysis of Phase 3 trial for its vaccine in the US confirmed its efficacy
  • North Korea fired two missiles; South Korea's Military later noted that the projectiles were 2 short-range missiles
  • Looking ahead, highlights include SARB & Banxico rate decisions, US GDP (final), IJC, US President Biden press conference, ECB's Lagarde, Schnabel, de Guindos, Fed's Clarida, Williams, Bostic, Evans, Daly, supply from the US (7yr)


AstraZeneca (AZN LN) announced positive primary analysis of Phase 3 trial for its vaccine in the US confirmed efficacy. Co. stated vaccine efficacy against symptomatic COVID-19 was at 76% (prev. 79%), while efficacy against severe and critical diseases was at 100% (prev. 100%) and efficacy for people aged 65 years and over was at 85% (prev. 80%), while it added that the vaccine was well tolerated and no safety concerns were identified. (Newswires)

AstraZeneca stated that 16mln doses of its COVID-19 vaccine for Europe are waiting for quality control. (Newswires)

Denmark is to extend the suspension AstraZeneca (AZN LN) COVID-19 vaccine for three weeks, via TV 2 reports. (Newswires)

Unicef said COVID-19 vaccine deliveries to the Covax facility for lower income countries are likely to face delays due to a setback in securing export licenses for further doses approved by the Serum Institute of India, while they are in talks with the Indian government to ensure deliveries as soon as possible. (Newswires)

Germany to introduce new entry regulations for travellers. Also, Germany are to need a negative COVID test before departure from all incoming flight passengers, even from non risk areas, according to Bild citing Government sources. (Newswires)


Asian equity markets were choppy as the region attempted to shrug-off the weak handover from Wall St where risk appetite was sapped amid further chatter of tax hikes in which both Treasury Secretary Yellen and Democratic Senator Manchin voiced their support for corporate tax increases. In addition, month- and quarter-end flows were also being touted as a potential factor coming into prominence while the declines were led by underperformance in small caps and tech which escalated to an initial bloodbath among Hong Kong-listed tech giants. Nonetheless, ASX 200 (+0.2%) was kept afloat for most of the session by resilience in defensive sectors and after officials including RBA Deputy Governor Debelle continued to speak highly of the domestic economy. Nikkei 225 (+1.2%) coat tailed on favourable currency flows with exporters cheering USD/JPY’s attempt to reclaim the 109.00 handle and the KOSPI (+0.4%) swung between gains and losses following news that North Korea fired another two missiles which Japan suggested may have been ballistic missiles and would therefore be in violation of UN resolutions, although South Korea later referred to them as short-range projectiles. Hang Seng (-0.1%) and Shanghai Comp. (-0.1%) were pressured at the open with a slump seen in the large tech names including Alibaba, Xiaomi, and Tencent following the US tech rout and amid delisting fears after the SEC recently adopted measures which could boot foreign companies off US exchanges if they do not comply with auditing standards. This dragged all components of the Hang Seng TECH Index into the red at early trade, while the recent China Q1 Beige Book was also tepid in which it noted that the service sector improved only marginally which is a sign consumption remains weak and a reason to remain cautious, although Chinese markets eventually rebounded from most the earlier losses. Finally, 10yr JGBs were softer amid a pullback in USTs and with demand sapped as Japanese stocks outperformed their regional peers, while the 40yr JGB auction provided some mild support as the results showed a relatively stable b/c and higher accepted prices.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position and the PBoC also sold CNY 5bln in 6-month CNY denominated bills in Hong Kong at a coupon rate of 2.60%. (Newswires) PBoC set USD/CNY mid-point at 6.5282 vs exp. 6.5289 (prev. 6.5228)

PBoC said it will maintain credit support continuity and stability for small and micro firms, while it will increase financial support to home leasing and maintain the stance that housing is for living not for speculating. Furthermore, the central bank stated that current recovery for China's economy is not yet solid and that it will guide banks to step up support for carbon emission reduction financing services. (Newswires)

PBoC Digital Currency Chief states paper notes and popular e-wallets will exist together. (Newswires)

PBoC Survey suggests 73.8% of bankers believe monetary policy is appropriate in Q1 and 14.1% believe policy is loose. Additionally, 25.2% of households believe housing rates will rise in Q2 whilst 10.9% believe housing prices will fall. (Newswires)

Chinese press speculated the PBoC could conduct its annual RRR review as early as today or April 6th based on prior years in which an adjustment could provide a boost to liquidity of CNY 50bln-100bln, while other reports suggested Chinese exporters are on course to get a USD 60bln windfall from Americans spending their stimulus checks. (Newswires/21st Century Business Herald)

China Q1 Beige Book stated that the services sector improved only marginally against a strong rebound in the broader economy which is a sign consumption remains weak, while it added that retail strengthened and the recovery was less uneven but a subdued services sector is a reason to stay cautious. (Newswires)

China's Foreign Ministry, on the US SEC law aiming to delist Chinese firms, says this is clearly discriminatory and distorts market principles. (Newswires)


Fed Chair Powell reiterates that the outlook is improved by vaccine rollout and fiscal support; level of debt today is not unsustainable. (Newswires)

Fed's Daly (voter) expects a very strong economic rebound in the fall followed by moderate growth thereafter. Furthermore, she added that the US economy is a long way from goals and declined to say when she expects a rate hike but noted we will need a healthy dose of patience. (Newswires)

Fed's Evans (voter) stated that the US economic recovery has been stronger than he expected, while he forecasts growth at 6.5% this year and sees unemployment rate to decline to around 4.5% this year. Evans also commented there are a lot of reasons to be optimistic but there are concerns and that he is worried about scarring effects for large parts of the workforce, while he suggested it is extraordinary that 10yr rates are as low as they are with all the fiscal spending. (Newswires)

US Treasury issued 37mln economic impact payments this week valued at USD 83bln and that total payments issued under the Biden stimulus plan have reached USD 325bln, while it will continue to issue payments in batches. (Newswires)

US Senate Budget Committee hearing today on tax code and tax fairness, according to Fox's Pergram. Whilst Chair of the Senate Budget Committee Sanders is to propose a corporate tax rate of 35% and a bill to create a surtax on estates. (Twitter/Newswires)

US President Biden's administration wishes to maintain the Trump policy that jump-started armed drone exports, according to sources. (Newswires)


BoE's Haldane said he senses that the economic recovery will come quickly and stated that people are desperate to get out and spend, while he added that a rip-roaring recovery is possible if UK savings are spent and that UK excess savings are about GBP 150bln. (Newswires)

UK PM Johnson said pub landlords could be given authority to bar anyone without a COVID-19 jab in the future and other reports noted that pubs could demand proof of vaccination or may insist drinkers conduct a test. (Sky News/The Sun)

UK ONS estimates 19% of workforce of UK businesses are on furlough. (Newswires)


North Korea fired two missiles which Japanese officials stated were ballistic missiles and did not enter Japan's EEZ, although South Korea's Military later noted that the projectiles were 2 short-range missiles. Japanese officials stated that the missile launches are a serious problem for Japan and the international community, while there were comments from US Pacific Command that they are monitoring the situation and that the launch shows North Korea is a threat to its neighbours. (Newswires)

China says they have not received any notice on President Biden's administrations sanctions on Iranian oil. Will defend the legitimate interests of Iran-Sino relations and make efforts to safeguard the deal. (Newswires)

German Chancellor Merkel says Turkey deserves recognition for the refugees they have taken in and will discuss how high-level contacts with Turkey can resume. (Newswires)


European stocks see somewhat of a choppy session within tight ranges (Euro Stoxx 50 -0.3%) after a similar tone was observed in APAC hours, with news flow again on the lighter side ahead of a myriad of central bank speakers and heading into month/quarter-end. On that note, BofA estimates that US private pensions will be needing equity-to-bond flows of some USD 88bbln, whilst JPM estimates balanced mutual funds to sell USD 136bln of equities and drop the money into fixed income. US equity futures have been consolidating following yesterday’s declines, with the tech-led NQ (+0.3%) narrowly outperforming. Sectors in Europe, however, portray more of a defensive bias, with a firmer performance seen across Staples, Healthcare, Telecoms, and Utilities, whilst value/cyclical sectors lag. Oil & Gas reside as the laggard amid the overnight decline in oil prices. Travel & Leisure continues to feel jitters over the worsening COVID situation in Europe. Further for the travel sector, the US CDC yesterday ordered the limit on US cruises to stay in effect until November 1st, thus Carnival (-3.8%) shares are plumbing the depths. In terms of individual movers, Adidas (-3.6%) is lower as its peer Nike (-3.5% pre-mkt) is facing backlash in China after they expressed concern about the alleged use of forced Uighur labour in the production of Xinjiang cotton, with H&M (-3.0%) also caught in the crosshairs. AstraZeneca (+0.5%) opened firmer as its amended Phase 3 results showed vaccine efficacy essentially unchanged. Siemens Healthineers (-1.4%) trades lower but trades off worst levels after announcing a share placement at a discounted price of USD 44.10/shr for some EUR 2.34bln.

Nike (NKE) - Co. is facing a backlash in China after they expressed concern about the alleged use of forced Uighur labour in the production of Xinjiang cotton. (BBC)

United Airlines (UAL) - In total, Co. plans to operate around 52% of its overall schedule in May 2021 vs May 2019. Furthermore, it was stated "in the past few weeks, we have seen the strongest flight bookings since the start of the pandemic." (PR Newswire)

UK CMA says the Facebook (FB) acquisition of Giphy raises competition concerns and could potentially harm rival social media platforms. (Newswires)


AUD/NZD/JPY - Contrasting fortunes for the Aussie, Kiwi and Yen as the Greenback continues to grind higher, with the Antipodeans deriving some traction from a rebound in APAC bond yields, but the latter losing more of its recent bullish momentum to suggest that Japanese buyers may have completed the bulk of their hedging and positioning for the turn of the month, quarter and financial year. Aud/Usd is keeping in touch with 0.7600 and Nzd/Usd is holding above 0.6950, while the Aud/Nzd cross pivots 1.0900 and Usd/Jpy breaches 109.00 eyeing several peaks that stand in the way of the y-t-d high from March 15 around 109.37. However, even if offers that were said to be sitting circa 109.30 have been withdrawn, the Yen could find solace via decent option expiry interest residing between 109.25-30 (1.5 bn) ahead of the NY cut.

USD/EUR/GBP - Notwithstanding the outperformance or resilience noted down under, the Buck remains on a firm footing and in DXY terms building a more solid platform above 92.500 to expose loftier multi-month targets above the 200 DMA, like 92.727, 92.804 and 92.847 dating back to November 19, 23 and 16 respectively. Conversely, the Euro is relying on a combination of option-related bids and sentimentality to maintain 1.1800+ status given 1.5 bn rolling off at the strike, while Sterling seems mainly dependent on chart support below 1.3700 as February 5’s circa 1.3658 low is the only level offering cover into 1.3650 and Fib retracements under the half round number.

CAD/CHF - The Loonie has drifted back down after probing 1.2550 vs its US counterpart yesterday in line with slippage in oil prices and the Franc is broadly flat following the SNB’s latest quarterly policy review that left all key policy settings and stances unchanged, as widely expected, but came with CPI upgrades, a relatively positive economic assessment for the 2nd half of 2021 and a change in the level of currency intervention to a willingness as and when required from ‘more’ strongly last December. Usd/Chf is hovering towards the base of a 0.9376-51 range and Eur/Chf nearer 1.1050 than 1.1070.

EM - Central Bank impulses also loom for the SA Rand and Mexican Peso, but for now both are trading on the front foot unlike the Turkish Lira that is still striving to remain off sub-8.0000 lows even though the head of the nation’s banking association claims that its members are not experiencing difficulty obtaining external funding, with risks rising, but manageable.

Turkish Banking Association head says the bank does not have problems securing overseas funding; adding that risks are increasing but manageable. (Newswires)

SNB Chairman Jordan says there is absolutely no change in the Bank's monetary policy. (Newswires)

SNB maintains its Policy Rate at -0.75% as expected, CHF classification reaffirmed as “highly valued”; reiterates the willingness to intervene in FX if necessary - but removes the 'more strongly' phrasing

  • Activity is likely to return to its pre-crisis level in the second half of the year. However, production capacity will remain underutilised for some time yet.


Bunds and Gilts remain firm and appear braced if not quite poised for further gradual progression towards midweek peaks that also marked fresh m-t-d highs, but USTs are still lagging behind and treading cautiously into the final leg of this week’s supply, and for good reason given the frosty reception afforded 7-year notes at their previous outing. Looking at levels in more detail, the 10 year German debt future is just off a 172.43 Eurex best vs 172.44 top on Wednesday, the UK equivalent 4 ticks under the 128.70 Liffe intraday apex and US peer at 132-02 within a 132-05+/131-30 band. Also ahead, IJC, final Q4 GDP and PCE metrics all before KC Fed manufacturing and either side of speakers.


WTI and Brent front month futures have started the session on a softer footing and are hovering just off worst levels, following on from Asia’s overnight lead where oil slid. On this, fundamental factors for the fragility in prices could be derived down to fresh COVID lockdowns which are restoring concerns over demand for oil products. Furthermore, adding to the ever-rising European infection rates, is the growing COVID rates in developing economies such as Brazil, and India, where on Wednesday the latter reported its highest one-day tally of new infections and deaths whilst finding a new “double mutant” variant. Despite the ongoing concerns over global demand, over in the supply side, the Suez Canal is still blocked which is potentially blocking 10 tankers carrying 13 million barrels of oil and hence the global supply of the commodity. Leading on from this, sources state the tanker may not be removed until Sunday which could create further constraints and filter through into oil prices. WTI May trades just above the USD 60.00/bbl handle (vs high 60.86/bbl) whilst its Brent counterpart trades marginally above USD 63.50/bbl (vs high 64.19/bbl). Looking ahead to notable risk events on the table include possible JMMC & OPEC+ source reports ahead of their meeting next week. As a reminder, yesterday OPEC+ sources that expectations are growing OPEC+ will rollover their current supply curbs into May. Reason for caution includes fresh lockdowns around the world alongside rising Iranian exports. However, this may be easier said than done as unanimity is needed for the final decision. Elsewhere, US GDP Final, US Initial Jobless Claims & US President Biden press conference are events to keep an eye on. Separately, spot gold and silver are both softer on the session which could be in the large part down to the stronger Dollar. However, it is worth noting overnight spot silver slipped to a two-week low, but gold inched higher due to the rising cases across Europe prompting some safe-haven flows, but gains were capped due to the Dollar hitting a fresh four-month high. Spot gold remains just above USD 1,730/oz (vs high USD 1,738/oz) and spot silver is marginally below USD 25/oz (vs high USD 25.16). Moving onto base metals, LME copper follows the softer sentiment and resides in the red and trading around USD 8,770/t. Dalian iron ore has risen for a third consecutive session amid an increase in demand and tight global supply, with the supply constraints linked to flooding in top exporter Australia, and the Suez Canal blockade.

Iron ore miner Fortescue's founder says that whilst iron ore has been unaffected by tensions between China and Australia, he does not rule out a potential future impact remarking that they are 'planning for an uncertain future'. (FT)

Suez Canal Authority says that operations to refloat the stranded container are underway, traffic is suspended temporarily. Later comments stated the Suez Canal Ever Given clearance could take days-weeks and the more secure the ship is the longer the operation could take, FT citing Boskalis CEO. (Newswires/FT)

UAE's ADNOC is planning to cut June-loading crude oil supplies to Asia by around 15%, according to sources. (Newswires)