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News & Analysis

NPF Week, Vaccine Updates, Brexit Deadline Looms and OPEC Meeting

30 November 2020

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By Deepta Bolaky
 @DeeptaGOMarkets

As investors are about to enter the final month of the pandemic year 2020, the attention will remain on the vaccine updates, Brexit and the global economic data to gauge the recovery which has the potential to bring more volatility to the markets.

Equity Markets

Recently, the vaccine updates and US politics have driven the stock market rally and we can expect the same driving forces to continue to steer the markets.

First Vaccinations

The US and the UK are stepping up preparations to facilitate the distribution of the vaccine once it has received the necessary approvals. As of writing, healthcare workers could be vaccinated as early as December 7th for the UK and December 10th for the US. Investors will intensely await for the CDC’s Advisory Committee on Immunisation Practices on Tuesday to approve for healthcare professionals and long-term care facilities to get the initial vaccine. 

Brexit

The pressure is mounting for Brexit as the transition period is due to end in almost a month. All eyes will remain on the state of the negotiations leading up to the Brexit deadline. After months of intense discussions and a deadlock of certain rights and conditions, investors will monitor the progress to see if a late deal or compromise is still possible.

Asia Pacific Trade Deal

China, Australia, New Zealand, Japan and another 11 countries in the Asia-Pacific region have signed one of the biggest free trade agreements in history. The Asian-Pacific stock market will likely get a boost as it is the world’s largest regional free-trade agreement, encompassing nearly a third of the world’s population and gross domestic product. 

Key Economic Data to Watch

NFP Week

As every other Nonfarm payroll week, employment and jobless readings will be important for traders to see whether the central bank will have to step up their efforts in stabilising the economy given the gridlock in Congress and the lack of timely stimulus support. Any readings on the downside will likely add further downward pressure on the US dollar. 

RBA and GDP numbers

The renewed confidence in the Australian economy seen recently was primarily boosted by the ongoing support from the government and central banks. The Australian budget and the additional quantitative easing program alongside a series of positive news; easing of lockdown measures, promising vaccine updates, and Asia-Pacific trade deal have well-supported the optimism in the Australian markets

On Tuesday, while we expect the RBA to keep interest rates unchanged, the attention will remain on the bond-buying program. After the Australian economy shrunk by 7% in the second quarter ending June 2020, the country battled a second wave of coronavirus outbreak forcing the second most populated and largest city to go into stricter lockdowns. 

The third-quarter GDP figure is expected to turn positive and take the economy out of recession given that the situation in other states was under better control. 

Commodities

Oil – OPEC Meeting

The oil market has remained pressurised by the uncertainty on the demand outlook and a supply glut. The broad optimism in the markets triggered largely by vaccine updates and hopes that the pandemic may soon be under control, has been providing support to a fundamentally battered energy market. 

Crude oil prices have firmed to the upside in the last few weeks in the anticipation that the global activities might be back to a new normal with the vaccine. On the supply side, the meeting scheduled to be held on Tuesday by major oil producers will be key for the oil markets. OPEC and its non-OPEC allies will discuss the extension of the production cuts. 

As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $45.13 and $47.66 respectively. Traders will likely keep monitoring weekly oil reports and OPEC commitments to production cuts for fresh trading impetus.

Gold

Gold plummeted below the psychological mark at $1,900 on the first announcement of Pfizer and BioNTech that its vaccine has a 90% efficacy rate. For the remaining month, the precious metal stayed underpinned by vaccine trials news and the US stimulus gridlock.

From the health crisis point of view, the vaccine updates are fuelling the hopes of a quicker recovery and providing reassurance to investors. However, the amount of stimulus injected into the global economy over the last couple of months is evidence that the economic and financial recovery might take some time.

Despite the recent sell-off seen, the precious metal was currently holding above the $1,800 mark until last Friday which triggered a deeper sell-off. There is no fundamental catalyst other than a technical one that drove the price of the metal below that mark. As of writing, the XAUUSD pair has dropped to its lowest point in four months and is currently trading around $1,786.

Key Events Ahead

Monday

  • Retail Trade, Industrial Production and Large Retailer Sales (Japan)
  • Eurogroup Meeting (Eurozone)
  • TD Securities Inflation and AIG Performance Mfg Index (Australia)
  • Non-Manufacturing PMI, NBS Manufacturing PM (China)
  • KOF Leading Indicator and Real Retail Sales (Switzerland)
  • Harmonized Index of Consumer Prices (Germany)
  • Current Account (Canada)
  • BoE’s Tenreyro speech (UK)
  • Chicago Purchasing Managers’s Index and Pending Home Sales (US)

Tuesday

  • Commonwealth Bank Manufacturing PMI, Building Permits, RBA Interest Rate Decision & Rate Statement (Australia)
  • Jobs/Applicants Ration and Unemployment Rate (Japan)
  • Gross Domestic Product (Switzerland)
  • EcoFin Meeting and CPI (Eurozone)
  • Unemployment Rate, Unemployment Change and Markit Manufacturing PMI (Germany)
  • Markit Manufacturing PMI (UK)
  • OPEC Meeting, Markit Manufacturing PMI, ISM Manufacturing PMI, Employment Index, Prices Paid, New Orders Index and Fed’s Chair Powell testimony (US)
  • GDP and Markit Manufacturing PMI (Canada)

Wednesday

  • RBA’S Governor Lowe Speech, GDP and AiG Performance of Construction Index (Australia)
  • Retail SALES (Germany)
  • Consumer Price Index (Switzerland)
  • Unemployment Rate (Eurozone)
  • ADP Employment Change, Fed’s Williams Speech and Beige Book (US)
  • Building Permits (New Zealand)

Thursday

  • Commonwealth Bank Services PM, Imports, Exports, and Trade Balance (Australia)
  • Caixin Services (China)
  • Markit PMI Composite (Germany)
  • Markit PMI Composite and Retail Sales (Eurozone)
  • Jobless Claims, ISM Services New Orders Index, Services PMI, Services Employment Index, and Prices Paid (US)

Friday

  • Retail Sales (Australia)
  • Factory Orders (Germany)
  • Nonfarm Payrolls, Trade Balance, Average Earnings, Labor Force Participation Rate, Underemployment Rate, Unemployment Rate and Factory Orders (US)
  • Unemployment Rate, Participation Rate, Hourly Wages and Net Change in Employment (Canada)

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By Deepta Bolaky
 @DeeptaGOMarkets

Tuesday, 01 December 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0.23 8.224 0.115 0.056 0.175 2.631 0.717
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0.509 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.