US Stocks Pare Weekly Gain; Dollar Advances

US stocks slipped from records as investors grew anxious that the virus will hamper growth for longer than expected and Democrats may struggle to get a nearly $2 trillion spending bill through Congress. The S&P 500 fell by 0.30% to 3,841.47 while Dow Jones was down 179.03 points (0.57%) to 30,996.98.

Surprise US Existing-home Sales Gain Caps Best Year Since 2006

Sales of previously owned US homes increased unexpectedly in December, capping the best year for the housing market since 2006 as historically low mortgage rates helped power demand. Contract closings rose 0.7% mom to an annualized 6.76 million rate, according to National Association of Realtors data released.

US Business Activity Quickens to Start 2021, IHS Markit Says

US business activity accelerated at the start of the new year, particularly among manufacturers, while capacity constraints generated more inflationary pressures. The IHS Markit flash January composite index of purchasing managers at manufacturers and service providers increased to 58, the second-highest since March 2015, from 55.3 a month earlier, the group reported.

Brexit Slows Down Factory Deliveries, Hitting UK Economy

IHS Markit said that UK output fell at the quickest rate since May, hurt by additional red tape from leaving the European Union single market and a severe lockdown at home. Markit said its composite Purchasing Managers Index slipped to 40.6 in January, well below the 45.5 forecast by economists and also the critical 50 mark that signals expansion.

UK Deficit at US$370bn Highlights Sunak’s Fiscal Challenge

UK government borrowing surpassed a quarter of a trillion pounds in the first nine months of the fiscal year, a milestone that underscores the damage the pandemic has wrought on the public finances. In December alone, spending exceeded tax revenue by 34.1bn pounds as the cost of supporting companies and households through the crisis escalated, Office for National Statistics figures showed. That left the total deficit at a record 270.8bn pounds (US$370bn)

Japan Maintains Severe Assessment of Economy Amid Emergency

Japan’s government maintained its assessment of the economy in January, using the same terms to describe its state for the seventh straight month, amid a jump in coronavirus numbers that’s triggered a renewed state of emergency. In its monthly report released, the Cabinet Office described the overall economy in the same grim terms as in December, saying conditions remain severe despite signs of improvement. The government upgraded its view of capital expenditure and housing construction, but lowered its assessment for private consumption and business conditions.

New Zealand Inflation Surprise Suggests No More RBNZ Rate Cuts

New Zealand inflation was firmer than economists expected in the fourth quarter, adding to signs the central bank may not need to cut interest rates any further. Consumer prices rose 1.4% yoy, Statistics New Zealand said, matching the thirdquarter reading. Prices rose 0.5% from three months earlier, exceeding the 0.2% forecast.

Oil Falls With Rising US Supplies An Obstacle to Recovery

Oil declined the most in a week with rising US crude stockpiles seen as an obstacle facing a market that is still recovering from a pandemic-induced demand slump. Brent crude for March settlement lost US$0.69 to US$55.41 per barrel.

Source: Affin Hwang Research - 25 Jan 2021