[RECAP] UK BANK HOLIDAY TRADE AND HEADLINES (3rd January 2022)

MONDAY'S TRADE:

Eurozone and US equity markets kicked off 2022 on the front foot in which the Stoxx 600 saw gains of 0.5% whilst Stateside majors saw mostly gains of a similar magnitude, but the Nasdaq outpaced with gains of 1.2%. The Wall Street session saw Apple become the first ever public company to reach (briefly) USD 3tln in market value, whilst Tesla shares gapped higher after beating Q4 delivery expectations despite the chip shortage and in spite of last week's mass recall.

The debt complex was under heavy pressure with the US underperforming the EZ and in turn yields spiked higher. Treasuries were on a steady path lower with some participants noting of large blocked Futures/Swap futures spread trades also adding weight at the time. The US 30yr yield topped 2.00% again while the 10yr yield rose above 1.63%. Back to Europe, IFR highlighted speculation of a new BTP syndicated deal as soon as Tuesday, potentially a 15yr or 30yr.

DXY was propelled higher by the surge in bond yields with G10 peers lower across the board. JPY was the most resilient G10 but USD/JPY remained above 115.00. AUD, NZD, CAD were the hardest hit. EUR/USD fell back under 1.1300 but remained within December ranges. TRY saw some strength following headlines from Turkey (see below).

WTI and Brent front-month futures both settled higher after a choppy day, with the latter outperforming the former. Natural Gas futures rose amid production impacts from winter storms across eastern US. Spot gold was pressured by the USD throughout the session and briefly dipped USD 1,800/oz.

NOTABLE HEADLINES (up to Monday's European Close):

CORONAVIRUS UPDATE

• Pfizer (PFE) and BioNTech (BNTX) received US FDA Emergency Use Authorization for its COVID booster for individuals aged 12 and older.


• UK PM Johnson said the way forward is to continue on the same path but everything will be kept under review. (Newswires)

ASIA

• China Evergrande (3333 HK) says authorities sent demolition orders on 39 buildings on Dec 30th. (Newswires)

EUROPE

• Chip-maker ASML (ASML NA) announced a fire on Sunday involving a part of its Berlin factory. (Newswires)


• EZ Final Manufacturing PMI (Dec) 58.0 vs Exp. 58.0 (prev. 58.4)


• German Final Manufacturing PMI (Dec) 57.4 vs Exp. 57.9 (prev. 57.4)


• French Final Manufacturing PMI (Dec) 55.6 vs Exp. 54.9 (prev. 55.9)

US

• US Final Manufacturing PMI (Dec) 57.7 vs Exp. 57.8 (prev. 58.3)


• AT&T (T) and Verizon (VZ) have rejected a government request to delay the rollout of 5G services this week. The US Transportation Secretary Buttigieg and the Federal Aviation Administration (FAA) made the request over concerns about aviation safety. AT&T and Verizon said they will implement temporary safeguards.(BBC)

FX

• Turkey will require exporters to convert 25% of their revenue to TRY in a government bid to boost its reserves. Turkish President Erdogan reiterated that inflation was brought down in the past and will be done again. Separately, Turkey raised electricity and gas prices by 130% and 50% respectively. (Newswires)


• Turkish CPI (Dec)Y/Y 36.08% vs exp. 30.60% (prev. 21.31%); M/M 13.58% vs exp. 9.00% (prev. 3.51%)


• A blaze has erupted again in South Africa's parliament building on Monday. A man was arrested for potential arson following the initial fire on Sunday. (BBC/Newswires)

COMMODITIES

• OPEC+ expects the Omicron variant impact to be mild and short-lived. Base case scenario sees OECD oil stocks next year under the 2015-2019 average.


• Libya shuttered a further 200k BPD of production to fix a broken pipeline. Following the latest militia intervention at the El Sharara oilfield, Libya's total production has declined by around 700k BPD, according to reports. (Newswires)


• Kuwait's Haitham Al-Ghais will replace Nigeria's Barkindo as OPEC Secretary General. (OPEC)


• Indonesia has banned coal exports in January amid domestic power worries.

GEOPOLITICS

• Yemeni Houthis say they seized an Emirati cargo ship in the Red Sea carrying armored vehicles and weapons. (Newswires)


• US President Biden told the Ukrainian President that the US will respond decisively if Russia further invades Ukraine.

2021 Stock Market Performance

• The S&P 500 rose for a third straight year, +27% in 2021, whilst the Nasdaq and DJIA notches yearly gains of 21.4% and 18.7% respectively. From a sectorial standpoint, Energy, Real Estate, Chips were the top 2021 performers, whilst growth (IGX) rose 31% and outperformed value (IVX) which gained 22%.


• In Europe, the FTSE 100 and DAX 40 each gained around 15% for the year, whist the CAC 40 logged gains of almost 30%. Euro Stoxx 50 rose 22.5% with Banks and Tech the outperformers for the year. The Travel sector was at the bottom of the bunch.


• 
  APAC equity markets mostly ended in the green for the year with the exception of Hong Kong's Hang Seng which declined some 14% in 2021.

03 Jan 2022 - 21:30- Research Sheet- Source: Newsquawk