Análisis de mercado diario

The hot US CPI print is still reverberating around markets. US bond markets were closed yesterday for Veteran’s Day. That means there will be some focus on treasury markets on the last trading of the week. Weekly closes are always important, especially after such a major data shock.

The dollar has continued its ascent, rising to 16-month highs and is poised for its best week in almost five months. This has seen oil prices dip as it grapples with a stronger dollar. Other commodities like copper are also lower. A stronger dollar makes greenback-priced metals more expensive to holders of other currencies.

Stock markets closed mixed on Wall Street, while Asian indices are also closing the week in a similar fashion. Evergrande concerns are weighing on Chinese markets, but the Nikkei has ended higher underpinned by tech stocks and brisk earnings.  Japanese shares have lagged behind global market and their valuations are low compared with other countries.

Gold bugs enjoying the limelight

After gold smashed through resistance at $1834, prices remain near the recent highs around $1860. Major support has come in the form of US 10-year real yields falling to record lows at minus 1.25%. Of course, the bumper US inflation has also seen the dollar surge, with traders raising US rate hike expectations for next year.

The precious metal has pull backed overnight. Momentum oscillators are nearing overbought territory so a healthy pause for breath should be constructive. The key upside target is the June high at $1916.

Crude oil falls again

After finding resistance near the recent highs, both WTI and Brent look like they are settling into a wide range. The latest weakness has been driven by President Biden’s statement that reversing inflation has become a top priority, especially in energy. Measures that could be introduced include the release of US Strategic Petroleum Reserves and even banning exports. Lower gas prices in Europe, as Russia finally increases supply, are also adding to downside pressures. This is likely to reduce gas-to-oil demand.

Lows around $80 should hold prices while the top of the recent range comes in at $85.77. OPEC released its latest monthly market report yesterday. This saw only marginal changes to supply and demand estimates for both this year and next. As a result, the report was fairly neutral for the market.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

The rally in global stocks is taking a breather before the weekend, having posted a new record high on Thursday. Asian stocks are in the red, although South Korea’s Kospi is leading the few that are bucking the region’s downward trend. Meanwhile, US equity futures are dipping slightly at the time of writing.

Friday’s pause appears warranted by technical indicators, seeing as the 14-day relative strength index for major benchmark indices from Hong Kong’s Hang Seng index to the Nasdaq Composite index have broken into overbought territory.

Eventful week ahead

Perhaps investors are taking a moment to consolidate their thoughts, as there’ll be plenty to take in over the coming days that may dictate whether global stocks can end the month with a flourish. The week ahead features a full slate, from Big Tech earnings, to tier-1 economic data out of the US and China, and of course, the next FOMC rate decision. Any of these key events may give riskier assets added reason to climb another leg higher, or at least have a major say on the risk narrative in global markets.

Expect more record highs for stock indices

The broader argument for more upside in risk assets remains intact: more incoming US fiscal stimulus is expected, the Fed set to remain ultra-accommodative, and the global economic recovery is being put on a firmer trajectory thanks to the vaccine’s rollout. Such conditions are creating a conducive environment for riskier assets to discover more of the upside.

Such a rose-tinted outlook has even afforded investors the luxury of ignoring the wary commentary out of global leaders. US President Joe Biden has warned that the death toll could exceed 500,000 in February. UK Prime Minister Boris Johnson didn’t dismiss the possibility of the lockdown extending into the summer. ECB President Christine Lagarde signaled the risk of a double-dip recession for Euro-zone economy.

Still, in the event that any of the downside risks to the global economy materializes, that may trigger the undoing of recent gains in multiple asset classes.

Oil bulls demand more proof

Oil benchmarks are paring weekly gains, as investors curb their demand-recovery optimism given Covid-19’s resurgence and extended lockdowns in major economies. On Oil traders’ radars are the EIA crude oil inventories prints, as well as the Markit PMI readings out of the US, UK and the EU, which are all due later on Friday.

Oil bulls need to be fed signs that global demand is taking surer strides towards pre-pandemic levels before prices can register further gains and take full advantage of the supply-side interventions. Although the recovery in Oil markets since April has been nothing short of remarkable, the easiest of the advances appear already over.

The lingering downside risks to the global economic outlook, coupled with the conflicting goals among major Oil producing nations, inhibit the commodity from exploring more of its upside. The $60/bbl handle for Brent futures may be a step too far for the time being, barring a material change to the supply-demand equation.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

US stock futures are pushing higher amid news reports that US President Donald Trump has officially signed off on a US$900 billion fiscal stimulus package, despite criticizing the bill just last week.

S&P 500 futures are attempting to create a larger gap above the psychologically-important 3700 line, with the spot index a mere 0.5 percent away from its highest-ever closing price, which was set on 17th December.

Should the optimism surrounding President Trump’s signing of this aid package hold over the coming days, it’s highly possible that the S&P 500 could post a new record high before 2020 is over.

Risk appetite spared from twin-negative-scenarios

Equity bulls are being heartened as two notably negative risks for markets were averted.

Firstly, President Trump’s approval of this Covid-19 aid package averts a US government shutdown while bringing some much-needed relief to millions of Americans. Also, it comes hot on the heels of a post-Brexit trade deal that was clinched between the UK and the EU just on Christmas Eve.

The prospects of a delayed US fiscal stimulus package and the disruptive effects from the much-feared no-deal Brexit had weighed on risk appetite. Now that those two major downside risks have all but diminished, risk assets should have little qualms pushing higher as they close out this remarkable year.

Asian stocks to ride on China’s successes

Asian stocks are also kicking off the final week of the year on a risk-on note. Japan’s Nikkei 225 is hovering around its highest levels since 1990, although the 27,000 handle may be just beyond the reach of equity bulls this year. Still, they can take plenty of heart from the near-13 percent year-to-date gain for the benchmark index for Japanese equities.

Likewise, the Hang Seng index may find its return to 27,000 elusive over the few trading days left in 2020, despite having breached that psychologically-important mark back in late November. However, Hong Kong's benchmark index remains more than six percent lower so far this year.

Still, Asian stocks can draw broad support from China’s continued economic recovery.

The November industrial profits in the world’s second largest economy, which was released on Sunday, grew by 15.5 percent compared to the same month last year. China’s superior ability to contain the Covid-19 pandemic suggests that it could become the world’s largest economy sooner than expected. According to the Centre for Economics and Business Research, China could leapfrog the US and lay claim to that prestigious title sometime within this decade, possibly by the year 2028, which is about five years earlier than the previous estimate.

China's growth prospects bode well for regional markets, while solidifying Asia’s role as the epicenter of global growth in the post-pandemic era.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

It’s become increasingly clear that China’s recovery is on a significantly steadier path.

China’s November industrial production posted a 7% growth compared to the same month in 2019, which is its fastest growth since March 2019. Its retail sales expanded by 5% year-on-year in November; its highest figures in 2020 so far. Fixed-asset investments over the first 11 months of 2020 have increased by 2.6% compared to the same period last year.

China leading the world into post-pandemic era

These data sets released today came in line with market expectations, and demonstrate why China is the only major economy expected to post a positive annual GDP for 2020. China’s economic outperformance is clearly illustrated in the Chinese Yuan’s strength. The offshore Yuan is trading around its strongest levels against the US Dollar since June 2018, and is Asia’s second-best performer against the Greenback so far this year.

So how has China been able to pull off such a remarkable resurgence?

Health is wealth

First and foremost, it came down to the health response within the Chinese population. What we have learned since this pandemic broke out is that, a country’s ability to constrain the spread of Covid-19 sets the foundation for its economic recovery. The local population’s compliance with some of the strictest lockdown measures in the world have proved crucial to China’s economic successes.

China used stimulus to great effect

The government’s initiatives in helping key sectors that have been adversely affected by the pandemic also helped the broader economy recover at a faster clip. For example, China’s manufacturing and non-manufacturing PMIs have been able to register a reading of 50 or higher every single month this year except in February. A reading of 50 denotes expansionary conditions in the manufacturing sector. Such resilience has clearly been aided by the fiscal stimulus with amounted to about 11% of China’s GDP. On the monetary policy side, the central bank has already hinted at being able to taper emergency support measures. This is in stark contrast to the central banks at G10 economies that have pledged to remain accommodative, potentially for years to come.

China benefitting from global recovery

China’s external trade figures also show booming conditions for the sector. Its November exports saw their biggest jump since February 2018, having recorded a 21.1% on-year increase. The positive surprise was fuelled by demand for medical equipment, work-from-home devices, and other goods necessary to survive amid the pandemic in other parts of the world. China’s exports have also benefited as its major trading partners slowly emerged from their respective lockdowns going into Q4, while the seasonal year-end pickup in demand also helped propelled its external trade figures.

Asia’s fortunes dependent on China’s recovery

Asian stocks have clearly been buoyed by China’s economic recovery, given the region’s dependence on the world’s second largest economy. The MSCI Asia Pacific index registered a record high this past Friday, and Asian stocks have beaten its counterparts in the developed markets so far in 2020. The MSCI Asia Pacific index has climbed by almost 14 percent on a year-to-date basis, beating the MSCI World index by about 3 percentage points.

However, Asian stocks are cooling off so far this week

Hong Kong’s Hang Seng index is now lower by 0.7 at the time of writing, extending its week-to-date losses beyond one percent. The city’s benchmark index has been unable to replicate its performance in late-November when it breached the psychologically-important 27,000 mark. Still, having formed golden crosses of late, whereby its shorter-term moving average has crossed above its longer-term counterparts, such technical episodes typically signals more gains to come. They also confirm the uptrend seen in the Hang Seng index, having posted higher highs and higher lows since its March trough.

Japan’s Nikkei 225 is also flirting with its own 27,000 mark, despite being lower by 0.3 percent on Tuesday. Still, Japan’s benchmark stock index remains around its highest levels since 1991.

Overall, as long as the region's economic recovery can take its cues from China, that should create more upside for Asian stocks moving forward.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian equities are edging lower on Wednesday, unable to keep pace with the new record highs posted by the S&P 500 and the Nasdaq 100 indices overnight. At the time of writing, Japan’s Nikkei 225 are among the regional bourses that are dipping into the red.

For context, the MSCI Asia Pacific index, which measures the overall performance of regional equities, had posted its highest ever closing price on November 27th. November’s advance of 10.18 percent was its largest monthly gain since May 2009. The current pause is likely to be temporary before resuming its search for a new record high.

The Hang Seng index may have to rely on technical factors to stick to this upward climb from recent months. The HSI50 has formed a “golden cross”, whereby its 50-day simple moving average (SMA) has crossed above its 100-day counterpart. Such a technical event typically heralds more near-term gains.

And with its 14-day relative strength index having pulled away from the 70 mark, which denotes overbought levels, the index has enough headroom to climb higher over the immediate future.

However, these two moving averages have already crisscrossed on multiple occasions in what has been a tumultuous year for the index. Noting that the momentum has started to trend downwards on the daily chart, the Hang Seng has a lot more work to do before it can erase the 5.9 percent year-to-date decline it still holds, with just a few weeks of trading left before 2020 is over. Also, it still remains a long, long way off from its record high. The index needs to break above January's 29,127 mark and post a higher-high before it can break out of the downtrend that has remained intact since 2018.

The broader rally in global equities is also taking a breather, with US equity futures also slipping.

Overall, the reasons to remain in risk-on mode remains intact.

There are several companies that are taking major strides towards developing their respective Covid-19 vaccines for the world. The US Congress is still trying to bring more financial support for the world’s largest economy, even as they prepare to transition to a new US President. The global economy is making strides to move into the post-pandemic era, led by China’s resounding recovery, as further evidenced by its better-than-expected November PMIs that were released over the past two days, with the Caixin China PMI services and composite readings due tomorrow. And with global central bankers at the ready to ensure their full support for their respective economies and to uphold orderly functioning of the financial markets, equity markets have a truly condusive environment to explore more of their upside, barring any negative shocks.

In short, as far as risk assets are concerned, all signs point to a joyous ending to what has been a truly unforgettable year.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.