US Stocks Advance as Day-trader Frenzy Eases

US equities mounted a comeback from their worst loss since October as moves to limit retail traders’ speculation in some companies opened the door for hedge funds to load up on stocks they had been ditching. The S&P 500 rose by 0.98% to 3,787.38 while Dow Jones was up 300.19 points (0.99%) to 30,603.36.

US Economic Growth Moderated to 4% in Final Quarter of 2020

The US economy downshifted in the final three months of 2020 after record thirdquarter growth, as the pandemic battered the labor market and limited Americans’ ability and willingness to spend. Gross domestic product expanded at a 4% annualized rate in the fourth quarter, according to a preliminary estimate released by the Commerce Department. While output of goods and services was far slower than the record 33.4% rate in the previous three months, the growth pace still exceeded the average of the decade-long expansion that ended early last year.

US Jobless Claims Fell by More Than Expected Last Week

Applications for US state unemployment benefits fell last week, signaling that job cuts may be easing after rising in December and early January. Initial jobless claims in regular state programs fell by 67,000 to 847,000 in the week ended Jan. 23, Labor Department data showed. On an unadjusted basis, initial jobless claims dropped to 873,966.

ECB Ready to Use All Tools Needed to Lift Inflation, Rehn Says

The European Central Bank is ready to use all the tools necessary to stimulate inflation, and is keeping a close eye on the euro’s appreciation, Governing Council member Olli Rehn said. “We are certainly ready to use and adjust all our instruments as appropriate,” the Finnish governor said. We are closely monitoring developments in the exchange rate, especially regarding the inflation outlook.

Euro-area Confidence Slips Amid Longer Curbs, Vaccine Trouble

Economic confidence in the euro area fell in January, after governments extended restrictions to contain the spread of the coronavirus and vaccination campaigns got off to a slow start. A European Commission sentiment index dropped to 91.5 from a revised 92.4, driven by plunging optimism in retail trade and smaller declines in services and consumer confidence. The mood in the industrial sector improved.

Thai Finance Ministry Cuts 2021 GDP Forecast on New Outbreak

Thailand’s Finance Ministry cut its economic forecast for 2021 to 2.8% from the 4.5% expected in October, factoring in the resurgence of Covid-19 and fresh government stimulus measures. The International Monetary Fund also recently lowered its 2021 GDP estimate for Thailand to 2.7%, from 4% previously.

Philippine Economy Shrinks More Than Expected on Weak Demand

The Philippine economy contracted more than economists expected in the fourth quarter, capping its worst year on record, as private consumption remained anemic even as more businesses reopened from lockdowns. Gross domestic product shrank 8.3% in the three months through December from a year earlier, the statistics agency said.

Oil Slips With Global Virus Risks Clouding a Demand Rebound

Oil declined the most in nearly a week with the spread of new Covid-19 variants and tighter lockdown measures weighing on nascent hopes of a demand recovery. Brent crude for March settlement fell US$0.28 to US$55.53 per barrel.

Source: Affin Hwang Research - 29 Jan 2021