Tech leads stock advance with lockdowns widening

Tech shares led US equity indexes higher, with the stay-at-home trade gaining appeal as investors weighed the impact of tougher virus restrictions on economic growth along with the outlook for widespread vaccine distribution within months. The S&P 500 rose by 0.39% to 3,581.87 while Dow Jones was up 44.81 points (0.15%) to 29,483.23.

US initial jobless claims rise for first time in five weeks

Applications for US state unemployment benefits rose for the first time in five weeks and remained well above pre-virus levels, suggesting the labor-market recovery is slowing amid a surging pandemic and fresh business restrictions. Initial jobless claims in regular state programs totaled 742,000 in the week ended Nov. 14, up 31,000 from the prior week, Labor Department data showed.

Treasury seeks unused funds from Fed in clash with central bank

The Trump administration and Federal Reserve publicly disagreed over whether to extend the central bank’s emergency pandemic lending programs, with the Fed objecting to the Treasury Department’s move toward ending several facilities. Treasury Secretary Steven Mnuchin, in a letter to Fed Chair Jerome Powell, sought a 90-day extension for four of the central bank’s emergency lending programs, while requesting five other programs expire on schedule on Dec. 31 and the Fed return $455 billion to the Treasury so Congress can spend the money elsewhere.

IMF, G-20 warn recovery may be derailed, risks still very high

Leaders of the global economy are warning that the recovery from this year’s recession is at risk and could be derailed as the resurgence of Covid-19 forces fresh restrictions on households and companies. The IMF noted progress on a vaccine, but also said elevated asset prices point to a disconnect from the real economy and a potential threat to financial stability.

EU leaders urged to step up preparations for no-deal Brexit

The leaders of France and Belgium urged the European Union to step up preparations for a no-deal Brexit at the end of the year in case negotiations with the UK fail to yield a last-minute breakthrough. French President Emmanuel Macron and Belgian Prime Minister Alexander De Croo both called on their colleagues to make contingency plans in case talks to sign a trade and security agreement fail.

Bank Indonesia cuts benchmark rate to record low

Indonesia’s central bank cut its policy rate for the first time in four months, urging banks to lend more to help drive an economic recovery. Bank Indonesia cut its seven-day reverse repurchase rate by 25 basis points to 3.75%, the lowest since the benchmark was introduced in 2016.

Philippines cuts key interest rate in surprise to economists

The Philippine central bank cut its key interest rate in a surprise move after the economy contracted more than expected in the third quarter. Bangko Sentral ng Pilipinas lowered its benchmark rate by 25 basis points to 2.0%. The latest move brought the total rate reduction this year to 200 basis points. The bank also has implemented credit relief and other liquidity measures in response to the pandemic amid limited fiscal stimulus.

Oil dips with sluggish US economic data a warning for demand

Oil edged lower with growing virus restrictions and signs the labor-market recovery may be slowing in the US dampens the near-term demand outlook. Brent crude for January settlement fell US$0.14 to US$44.20 per barrel.

Source: Affin Hwang Research - 20 Nov 2020