US Stocks Rally as Day-trading Frenzy Collapses

Stocks posted a back-to-back rally as the trading frenzy that fueled a surge in heavily shorted shares crumbled. Investors also sifted through a batch of corporate earnings. The S&P 500 rose by 1.39% to 3,826.31 while Dow Jones was up 475.57 points (1.57%) to 30,687.48.

Biden Plans Supply Chain Review After Virus Caused Shortages

President Joe Biden will order a government-wide review of critical supply chains, in an effort to reduce US reliance on countries such as China for essential medical supplies and minerals, according to people familiar with the matter. The administration’s goal is to protect government and private sector supply chains to prevent future shortages and limit other countries’ ability to exert leverage over the US, according to an administration official.

Fed Finds Race, Gender Disparities Cut US GDP by US$2.6trn

Racial and gender disparities have resulted in growing losses to the US economy that amounted to US$2.6trn in 2019, according to a new study co-authored by Federal Reserve Bank of San Francisco President Mary Daly. The study estimated economic costs from persistent education and labor-market gaps over time, finding losses have grown from US$1.9trn in 1990 as the US population has become more racially diverse.

Euro-area Economy Shrank Less Than Forecast at End of 2020

The euro-area economy shrank less than expected at the end of last year, though it remains on the verge of a double-dip recession amid a slow rollout of coronavirus vaccines. Gross domestic product declined 0.7% in the fourth quarter, compared with estimates for a 0.9% drop. Italy reported a contraction of 2%. Euro-area output fell 6.8% in 2020 as a whole.

UK’s Sunak Set to Protect Pensioners With ‘triple Lock’ Pledge

UK finance minister Rishi Sunak is planning to keep the government’s promise to increase the state pensions of millions of elderly people by at least 2.5% every year, saving a flagship policy despite the costs. According to a person familiar with the matter, the chancellor of the exchequer will retain the “triple lock” guarantee to raise the state pension by the highest of three measures: annual growth in average earnings, inflation, or 2.5%. Around 12.5 million people receive the pension.

Australia Extends QE Program to Stay Inline With Global Peers

Australia’s central bank will extend its quantitative easing program by a further A$100 billion (US$76.2 billion) and doesn’t expect to increase interest rates until 2024, following in the footsteps of global peers in moving to stamp out premature tapering speculation. Governor Philip Lowe left the key rate and three-year yield target at 0.10%, the Reserve Bank said in a statement.

Hong Kong Retail Sales Plummet After New Virus Restrictions

Hong Kong’s retailers didn’t see much benefit from the key holiday shopping season, with sales plunging in December after the government tightened controls to combat a surge in virus cases. Retail sales by value fell 13.2% from a year ago to HK$31.4 billion (US$4.05 billion), after dropping a revised 4.1% in November, the Hong Kong Census and Statistics Department said in a statement.

Oil Jumps to One-year High With Depleting Supplies Aiding Rally

Oil climbed to the highest level in over a year as tightening global supplies and signs of strength in physical markets aided crude’s virus-recovery rally. Brent crude for April settlement rose US$1.11 to US$57.46 per barrel.

Source: Affin Hwang Research - 3 Feb 2021