Tech Leads Stock Losses Amid Valuation Warnings

US stocks dropped after the biggest rally in nine months spurred speculation about excessive investor optimism. Treasuries stabilized, following a recent spike in yields. The dollar retreated. The S&P 500 fell by 0.81% to 3,870.29 while Dow Jones was down 143.99 points (0.46%) to 31,391.52.

Biden Urges Democrats to Unite Behind US$1.9trn Bill

President Joe Biden urged Democrats to quickly resolve lingering disputes over his US$1.9trn stimulus plan, with moderates including Senator Joe Manchin pushing to lower unemployment benefits and progressives already upset by the jettisoning of a US$15 minimum wage. Biden emphasized the need to put aside differences and pass the bill quickly as the special budget process can’t accomplish every goal.

ECB Slows Bond-buying Despite Strong Warnings on Yields

The European Central Bank (ECB) slowed emergency bond-buying pace last week, suggesting policy makers mostly relied on verbal interventions to stem rising yields that jeopardize the region’s economic recovery. Gross purchases settled under its pandemic emergency program totaled 16.9 billion euros (US$20.3bn) last week, the least in four weeks.

Sunak Extends Furlough Pay for UK Workers Through September

Rishi Sunak will extend furlough payments to UK workers until the end of September, protecting millions of people whose jobs were suspended during the coronavirus pandemic until after restrictions are set to be lifted. The government will keep paying 80% of wages for those in the program through the end of June, the Treasury said in a statement. That allowance will decline over the following three months. Assistance to the self-employed will be extended with more people eligible.

German Unemployment Unexpectedly Rises as Lockdown Persists

German joblessness unexpectedly rose for the first time in eight months. The rise of 9,000 put the total number of unemployed people at 2.75 million and the rate at 6%, according to the Federal Labor Agency. The blow is being cushioned by government subsidies to enable companies to hold on to staff. More than 2 million workers benefited from a generous furlough program in January, according to the latest estimates by the Ifo Institute -- a number that is likely to have risen since.

Italy Likely to Seek Extra Stimulus as Virus Outlook Worsens

Italy’s new government may soon seek parliamentary approval for more stimulus spending as a sluggish vaccination campaign and new coronavirus strains extend the nation’s reliance on fiscal support. Prime Minister Mario Draghi’s administration is planning to distribute about 32bn euros (US$38bn) that was approved by the parliament in January through a new decree called “sostegno” or “support,” according to people familiar with the matter.

South Korea’s Manufacturing Powers Ahead Even as China Slows

South Korea’s manufacturing activity expanded at the fastest pace in more than a decade in February, even as the Lunar New Holiday across Asia cut demand and spurred a slowdown in China. A report from IHS Markit showed PMI for Korean manufacturing jumped to 55.3 last month, the highest reading since April 2020.

WTI Oil Sinks Toward US$60 Before OPEC+ Meets to Decide on Supplies

WTI oil tumbled below US$60 a barrel in New York with the OPEC+ alliance said to be set to agree to a production increase later this week. Brent crude for May settlement fell US$0.99 to US$62.70 per barrel.

Source: Affin Hwang Research - 3 Mar 2021