Stocks Hit Record as Small Caps Jump; Dollar Gains

Stocks extended their rally into a fourth day as investors parsed through a flurry of corporate results amid signs the US labor market may be gradually improving. The dollar rose. The S&P 500 rose by 1.09% to 3,871.74 while Dow Jones was up 332.26 points (1.08%) to 31,055.86.

US Jobless Claims Fall to Lowest Level Since End of November

Applications for US state unemployment benefits fell last week to the lowest level since the end of November, a sign that job cuts are starting to slow as Covid-19 infections ebb. Initial jobless claims in regular state programs decreased by 33,000 to 779,000 in the week ended Jan. 30, the third straight decline, Labor Department data showed.

Fewer Job Losses Seen in January as Canada Adapts to Lockdowns

Job losses in Canada probably slowed last month in another sign the nation’s economy is handling the current wave of lockdowns better than it did last year. Statistics Canada is expected to report a 40,000 employment decline. For almost half the industries tracked by Statistics Canada, employment has already surpassed pre-pandemic levels.

BOE Tells Banks to Get Ready for Negative Rates Possibility

The Bank of England told banks to start getting ready for negative interest rates, while saying that message shouldn’t be taken as a signal that the policy is imminent. The central bank’s Prudential Regulation Authority said most financial institutions aren’t sufficiently prepared, especially as regards to retail products like rate-tracking mortgages, so they should take at least six months to set their systems up without running undue risks.

Macron’s Lockdown Conundrum Will Decide France’s Recession Fate

The French economy is on the brink of tipping into another recession, depending on President Emmanuel Macron’s next move to contain the Covid-19 pandemic. If the government replaces the current curfew with a seven-week nationwide lockdown similar to November’s, the economy would shrink 1% in the first quarter after a 1.3% contraction at the end of last year, national statistics agency Insee estimates.

RBA’s Lowe Says Australian Rates to Stay Low for ‘a While Yet’

Australia’s central bank chief Philip Lowe said the outlook for the economy has improved, though interest rates will remain low for “quite a while yet” amid muted price pressures. “The downturn in Australia was not as deep as we had feared and the recovery started earlier and has been stronger than we were expecting,” the Reserve Bank of Australia governor told.

Thai Finance Ministry Open to More Stimulus If GDP Misses Target

Thailand’s government is ready to take more fiscal steps if economic growth falls below its base-case forecast, driven by the latest Covid-19 outbreak or delays in vaccinating the public, a senior Finance Ministry official said. “The government is ready to do more if needed, and we still have fiscal space left,” Kulaya Tantitemit, acting director general of the Fiscal Policy Office, said. Still, she believes the ministry’s economic growth forecast for this year, which was revised down to 2.8% last week.

Oil Surges to One-year High Fueled by OPEC+ Commitment on Supply

Oil jumped to the highest in more than a year, extending this week’s rally to above US$56 a barrel, with investors confident that OPEC+ producers are committed to restraining global supplies. Brent crude for April settlement rose US$0.38 to US$58.84 per barrel.

Source: Affin Hwang Research - 5 Feb 2021