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The Weekly Wrap – COVID-19 Vaccine News Supported Riskier Assets in the Week

Out of the U.S

It was a busy week on the economic data front.

In the 1st half of the week, prelim private sector PMI numbers for November impressed. The all-important services PMI rose from 56.9 to 57.7, with the manufacturing PMI climbing from 53.4 to 56.7.

Consumer sentiment waned in November, however, with the CB Consumer Confidence Index falling from 101.4 to 96.1. This was to be expected, with the latest spike in new COVID-19 cases and dire labor market conditions.

Mid-week, the weekly jobless claims, core durable goods orders, 3rd quarter GDP, and personal spending figures were in focus.

The stats were mixed. Initial jobless claims rose from 742k to 778k in the week ending 20th November. The latest figure further confirmed that the labor market recovery had stalled.

Core durable goods orders impressed with a 1.3% rise in October, with personal spending rising by 0.5% to come in ahead of forecasts. Spending was down from a 1.2% rise in September, however.

2nd estimate GDP numbers for the 3rd quarter were in line with 1st estimates, which came up short of a forecasted upward revision.

Other stats ahead of the Thanksgiving holidays included finalized consumer sentiment and inflation figures.

The Michigan Consumer Sentiment Index came in at 76.9, down from a prelim 77.0. Of greater significance was softer inflationary pressures in October. The annual rate of inflation eased from 1.6% to 1.4%.

On the monetary policy front, the FOMC meeting minutes had a muted impact. The FED focus on the COVID-19 pandemic was somewhat dated following the latest COVID-19 vaccine updates.

In the equity markets, the NASDAQ rose by 2.96%, while the Dow and S&P500 gaining 2.21% and 2.27% respectively.

Out of the UK

It was a relatively quiet week on the economic data front.

Prelim private sector PMI numbers for November were in focus at the start of the week.

It was a mixed bag, with manufacturing sector activity seeing a pickup, while the services sector contracted.

The all-important services PMI slid from 52.3 to 45.8 as lockdown measures hit the sector.

Away from the economic calendar, the Pound did find some support on hopes of an imminent Brexit deal, however.

In the week, the Pound rose by 0.27% to $1.3311. In the week prior, the Pound had risen by 0.65% to $1.3275

The FTSE100 ended the week up by 0.25%, following on from a 0.56% gain in the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Prelim private sector PMIs for France, Germany, and the Eurozone were in focus at the start of the week.

With lockdown measures in place, the services sector took a hit, with the Eurozone Services PMI falling from 46.9 to 41.3.

Eurozone manufacturing sector activity eased as a result of a contraction in France, while Germany continued to report solid growth in the sector.

On Tuesday, the focus shifted to Germany. Finalized 3rd quarter GDP and November’s IFO Business Climate figures were in focus.

While an upward revision to 3rd quarter GDP numbers was positive, a slide in business sentiment disappointed. The Ifo Business Climate Index fell from 92.5 to 90.7.

The markets were expecting a deterioration in sentiment, however, which limited the impact on the EUR.

In the 2nd half of the week, Germany’s GfK Consumer Climate indicator reflected consumer sentiment towards the COVID-19 pandemic. A reintroduction of containment measures dragged the headline indicator down from -3.2 to -6.7.

From France, finalized 3rd quarter GDP, October consumer spending, and prelim inflation figures for November were in focus on Friday.

Consumer spending and inflation were the main areas of focus, with the markets less interested in 3rd quarter numbers in spite of an upward revision to 18.7%.

The stats were skewed to the positive, with consumer spending jumping by 3.7%, following a 4.4% slide in September.

Consumer prices were also on the rise. In November, consumer prices rose by 0.2%. Prices had been flat in October.

From the ECB, November’s financial stability review and monetary policy meeting minutes delivered a grim view. There was EUR resilience, however, coming from progress towards a COVID-19 vaccine.

For the week, the EUR rose by 0.89% to $1.1963. In the week prior, the EUR had risen by 0.19% to $1.1857.

For the European major indexes, it was another bullish week. The CAC40 rose by 1.86%, with the DAX30 and EuroStoxx600 gaining 1.51% and 0.93% respectively.

For the Loonie

It was a particularly quiet week on the economic data front.

There were no material stats to provide direction. The lack of stats left the Loonie in the hands of COVID-19 news updates and crude oil inventory numbers.

In the week ending 27th November, the Loonie rose by 0.81% to C$1.2989. In the week prior, the Loonie had risen by 0.32% to C$1.3095.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 27th November, the Aussie Dollar rose by 1.16% to $0.7387, with the Kiwi Dollar rallying by 1.41% to end the week at $0.7027.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats included 3rd quarter construction work down and new capital expenditure figures.

The stats were skewed to the negative, with both taking a larger hit than expected in the quarter.

While the stats were disappointing, hopes of a COVID-19 vaccine by the end of the year delivered support.

For the Kiwi Dollar

It was a busier week on the economic calendar.

3rd quarter retail sales and October trade figures were in focus, with both sets of numbers beating forecasts.

Retail sales surged by 28%, reversing a 14.6% slide from the 2nd quarter, with the annual trade deficit widening to a 28-year high NZ$2,190m.

From the RBNZ, November’s Financial Stability report also delivered support to the Kiwi Dollar, while risks remained tilted to the downside.

For the Japanese Yen

It was a quiet week on the economic calendar.

November inflation figures at the end of the week failed to move the dial. A pickup in deflationary pressures was aligned with the market outlook. Tokyo’s core consumer prices fell by 0.7%, following a 0.5% decline in October.

While the inflation figures disappointed, updates on the COVID-19 vaccine eased demand for the Yen.

The Japanese Yen fell by 0.22% to ¥104.09 against the U.S Dollar. In the week prior, the Yen had risen by 0.74% to ¥103.86.

Out of China

It was a particularly quiet week on the economic data front.

There were no material stats to provide the Yuan with direction in the week.

In the week ending 27th November, the Chinese Yuan fell by 0.23% to CNY6.5781. The Yuan had risen by 0.66% to CNY6.5630 in the week prior.

The CSI300 rose by 0.76%, with the Hang Seng ended the week up by 1.68%.


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