26th October 2020

Equity Markets

Asian Equity Market

In Asia, the Globex open saw some selling in US futures as the gloomy weekend news resulting from escalating Covid-19 cases worldwide weighed on it. The Nikkei continued to be more resilient, closing slightly under unchanged, but the SHCOMP lost -0.82% on the day. The Kospi dropped – 0.72%, led by the Kosdaq down almost -4%. Hong Kong will reopen today.

European Equity Market

Europe saw the brunt of the selling, with SAP’s results dragging the rest lower. The DAX was down -3.71% for its lowest close since July 1. Most of the other major indices lost more than -1.5%, though the UK’s FTSE 100 performed relatively better at -1.16%. The Stoxx 50 is currently approaching the lower end of its summer trading range and a sustained break could see losses accelerate.

US Equity Market

In the US, each of the major indices closed below their 50-day MA (except the Russell 2000), but off session lows. The Russell however, lost the most ground at -2.15%. This was the Nasdaq’s 7th close lower in 10 days. Implied volatilities spiked higher across the board, even as the VVIX confirmed the move higher in VIX. Amongst the S&P sectors, all closed negative as energy led to the downside at -3.6%. Utilities closed slightly under unchanged.

Fixed Income

Longer-term U.S. Treasury yields fell on Monday as investors sold stocks amid a fast-rising case count in the COVID-19 pandemic and as stimulus talks in Washington dragged on. Longer-term yields fell -4.19-5.01bps, and shorterterm yields fell -0.6-1.01bps. This had the effect of flattening the US US 2Y- 10Y curve to 65.16bps. BlackRock Inc downgraded U.S. Treasuries and upgraded inflation-linked counterparts ahead of the election, citing a growing likelihood of fiscal expansion that would occur should Democrats win both the White House and the U.S. Senate. European government yields fell from the range of -0.6-1.90bps, with the Italian govies leading the charge. 2Y Italian yields hit their lowest level in a year at -0.382%, following an unexpected rating outlook upgrade from S&P.

Commodities

Most commodities dropped on dollar strength and possibly more Covid-19 restrictions. Brent fell -3.14%, falling below the 200-day MA at 40.97, while the WTI dropped -3.24%, with the oil volatility index rising more than 14%. In base metals, the complex was awash in red, as macro weakness weighed on it. Copper was the laggard, losing -1.26%, as it failed to rebound from its previous breakout levels near 6,870. In precious metals, gold clawed its way back to unchanged after indicating some losses earlier in the day. However, silver lost -1.33%, again threatening the break of its trendline since Mar 2020.

Currencies

The U.S. dollar advanced on Monday, bolstered by safe haven bids amid surging coronavirus cases in Europe and the United States as well as a lack of progress on a U.S. stimulus package. The dollar index rose 0.30% to 93.045, the most in more than a week. The euro, which has the largest percentage share of the dollar index, fell -0.42% to $1.181. It slipped on poor German Ifo business climate data. The U.S. dollar rose 0.49% against the offshore yuan to 6.7 the most in 2 weeks, in a sign of caution as the Chinese government began discussions on its next five-year plan.

27th October 2020

Equity Markets

Asian Equity Market

In Asia, the Globex open saw some selling in US futures as the gloomy weekend news resulting from escalating Covid-19 cases worldwide weighed on it. The Nikkei continued to be more resilient, closing slightly under unchanged, but the SHCOMP lost -0.82% on the day. The Kospi dropped – 0.72%, led by the Kosdaq down almost -4%. Hong Kong will reopen today.

European Equity Market

Europe saw the brunt of the selling, with SAP’s results dragging the rest lower. The DAX was down -3.71% for its lowest close since July 1. Most of the other major indices lost more than -1.5%, though the UK’s FTSE 100 performed relatively better at -1.16%. The Stoxx 50 is currently approaching the lower end of its summer trading range and a sustained break could see losses accelerate.

US Equity Market

In the US, each of the major indices closed below their 50-day MA (except the Russell 2000), but off session lows. The Russell however, lost the most ground at -2.15%. This was the Nasdaq’s 7th close lower in 10 days. Implied volatilities spiked higher across the board, even as the VVIX confirmed the move higher in VIX. Amongst the S&P sectors, all closed negative as energy led to the downside at -3.6%. Utilities closed slightly under unchanged.

Fixed Income

Longer-term U.S. Treasury yields fell on Monday as investors sold stocks amid a fast-rising case count in the COVID-19 pandemic and as stimulus talks in Washington dragged on. Longer-term yields fell -4.19-5.01bps, and shorterterm yields fell -0.6-1.01bps. This had the effect of flattening the US US 2Y- 10Y curve to 65.16bps. BlackRock Inc downgraded U.S. Treasuries and upgraded inflation-linked counterparts ahead of the election, citing a growing likelihood of fiscal expansion that would occur should Democrats win both the White House and the U.S. Senate. European government yields fell from the range of -0.6-1.90bps, with the Italian govies leading the charge. 2Y Italian yields hit their lowest level in a year at -0.382%, following an unexpected rating outlook upgrade from S&P.

Commodities

Most commodities dropped on dollar strength and possibly more Covid-19 restrictions. Brent fell -3.14%, falling below the 200-day MA at 40.97, while the WTI dropped -3.24%, with the oil volatility index rising more than 14%. In base metals, the complex was awash in red, as macro weakness weighed on it. Copper was the laggard, losing -1.26%, as it failed to rebound from its previous breakout levels near 6,870. In precious metals, gold clawed its way back to unchanged after indicating some losses earlier in the day. However, silver lost -1.33%, again threatening the break of its trendline since Mar 2020.  

Currencies

The U.S. dollar advanced on Monday, bolstered by safe haven bids amid surging coronavirus cases in Europe and the United States as well as a lack of progress on a U.S. stimulus package. The dollar index rose 0.30% to 93.045, the most in more than a week. The euro, which has the largest percentage share of the dollar index, fell -0.42% to $1.181. It slipped on poor German Ifo business climate data. The U.S. dollar rose 0.49% against the offshore yuan to 6.7 the most in 2 weeks, in a sign of caution as the Chinese government began discussions on its next five-year plan.

30th October 2020

Equity Markets

Asian Equity Market

In Asia, the Nikkei dropped -0.37%, continuing its resilience to the problems in the US. It broke the uptrend extending from Aug on Tuesday, though sellers have been unable to press it down so far. The SHCOMP pushed from the session open, closing +0.11% higher, while the HSI still lost -0.49%. The Kospi was down -0.79% but was also off morning lows.

European Equity Market

In Europe, after accelerating through the underside of its summer trading range, the STOXX 50 had a brief respite yesterday at -0.12%. The DAX broke a 3-day slide, gaining +0.33%, though the Ibex lost -0.97% to lead to the downside.

US Equity Market

The US, the major indices were higher on the day, led by the Nasdaq’s +1.87% gain vis-à-vis the S&P 500 (+1.20%), and the small-cap Russell 2000 (+1.19%). Earnings from FAAG stocks dominated the afterhours action though, pushing futures down, as investors looked for more growth to sustain the multiples. Volatilities fell across the board, with large VIX put buyers evident, as investors worried about the volatility crush following the US election, as was the case in 2016.

Fixed Income

U.S. Treasury yields steepened on the longer-dated end, steepening the US 2Y-10Y to 67.64bps. The rally in long-end yields picked up on Thursday afternoon after a record $53 billion auction of new 7-year notes was met with weak demand. Bond volatility seen through the Move index, was also higher yesterday and is now at the highest levels since early June. Following the ECB’s commitment to further stimulus, peripheral bond yields fell with the Spanish and Portuguese 10Ys falling to 10-day lows, while Italian yields had their biggest daily fall since mid-Sep. The Italian-German 10Y bond yield spread tightened to 133 bps, coming in from month-highs of 140 bps.

Commodities

Crude continued its recent break lower, pushing Brent and WTI another – 3.76% and -3.26% lower respectively. Concerns over the global slowdown and further lockdowns have changed the fundamental picture dramatically in the past 2 weeks, and oil vol is now pricing in nearly 4% daily moves. In base metals, it was a somewhat down day for the complex, with the exception of lead (+2.62%) and zinc (+0.1%). Nickel was the laggard at -1.28%, losing

ground after the previous day’s big reversal intraday. In precious metals, after losing the 1900 handle on Wed, gold fell further at -0.51%, with levels approaching late Sep closes.

Currencies The safe-haven dollar rose on Thursday, despite some respite in the macro environment. The rise was largely across the board, but was more prominent against the Euro, which dropped -0.61% to its lowest levels since end-Sep. The ECB had earlier kept rates and bond buying stable, with Lagarde including the potential for increased stimulus in Dec, though negative comments on the economy weighed. The drop in oil affected the loonie, which moved above its 100-day MA at 1.3331 during the session but was unable to sustain. Elsewhere, the aussie dropped -0.23%, but successfully defended the 0.70 barrier thus far

Equity Markets

Asian Equity Market

In Asia, the Nikkei dropped -0.37%, continuing its resilience to the problems in the US. It broke the uptrend extending from Aug on Tuesday, though sellers have been unable to press it down so far. The SHCOMP pushed from the session open, closing +0.11% higher, while the HSI still lost -0.49%. The Kospi was down -0.79% but was also off morning lows.

European Equity Market

In Europe, after accelerating through the underside of its summer trading range, the STOXX 50 had a brief respite yesterday at -0.12%. The DAX broke a 3-day slide, gaining +0.33%, though the Ibex lost -0.97% to lead to the downside.

US Equity Market

The US, the major indices were higher on the day, led by the Nasdaq’s +1.87% gain vis-à-vis the S&P 500 (+1.20%), and the small-cap Russell 2000 (+1.19%). Earnings from FAAG stocks dominated the afterhours action though, pushing futures down, as investors looked for more growth to sustain the multiples. Volatilities fell across the board, with large VIX put buyers evident, as investors worried about the volatility crush following the US election, as was the case in 2016.

Fixed Income

U.S. Treasury yields steepened on the longer-dated end, steepening the US 2Y-10Y to 67.64bps. The rally in long-end yields picked up on Thursday afternoon after a record $53 billion auction of new 7-year notes was met with weak demand. Bond volatility seen through the Move index, was also higher yesterday and is now at the highest levels since early June. Following the ECB’s commitment to further stimulus, peripheral bond yields fell with the Spanish and Portuguese 10Ys falling to 10-day lows, while Italian yields had their biggest daily fall since mid-Sep. The Italian-German 10Y bond yield spread tightened to 133 bps, coming in from month-highs of 140 bps.

Commodities

Crude continued its recent break lower, pushing Brent and WTI another – 3.76% and -3.26% lower respectively. Concerns over the global slowdown and further lockdowns have changed the fundamental picture dramatically in the past 2 weeks, and oil vol is now pricing in nearly 4% daily moves. In base metals, it was a somewhat down day for the complex, with the exception of lead (+2.62%) and zinc (+0.1%). Nickel was the laggard at -1.28%, losing

ground after the previous day’s big reversal intraday. In precious metals, after losing the 1900 handle on Wed, gold fell further at -0.51%, with levels approaching late Sep closes.

Currencies The safe-haven dollar rose on Thursday, despite some respite in the macro environment. The rise was largely across the board, but was more prominent against the Euro, which dropped -0.61% to its lowest levels since end-Sep. The ECB had earlier kept rates and bond buying stable, with Lagarde including the potential for increased stimulus in Dec, though negative comments on the economy weighed. The drop in oil affected the loonie, which moved above its 100-day MA at 1.3331 during the session but was unable to sustain. Elsewhere, the aussie dropped -0.23%, but successfully defended the 0.70 barrier thus far.

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