Global market sentiment turned positive last week, recovering from the “short squeeze” event as market sentiment was boosted by the passing of President Biden’s USD1.4 trillion stimulus package in the Senate, followed by encouraging earnings reports from US companies. In China, new economy sectors outperformed the broader market, as consumption stocks drove markets higher during the week ahead of the festive season. The local market followed its lead despite the extension of MCO2.0, as the Malaysian vaccine rollout program was announced to begin by the end of the month. Commodity wise, crude oil prices performed well following encouraging economic outlook in the US, while gold prices dipped as appetite for riskier assets returned. 

In The News

  • While vaccines distribution is already underway in most major economies, number of COVID-19 cases remains elevated, recording over 106 million cases globally with 2.3 million deaths.
  •  Markets put their focus on stimulus progress last week, as President Biden’s proposed USD 1.9 trillion stimulus package was narrowly backed by the Senate, which markets believe will get final approval via simple majority through a reconciliation process.
  • The excitement from last week’s “short squeeze” event fizzled out, as markets jumped back from its worst weekly dip since October. Market sentiment improved thanks to the stimulus progress, improving COVID-19 numbers and encouraging signs of economic recovery.
  • As fourth quarter earnings results continues to be better than expected, US companies are now expected to report modest increase in earnings overall, compared to the previous small decline that had been forecasted last week.
  • The S&P 500 index rose 5.44% in MYR terms while tech-focused Nasdaq jumped by 6.81% with the support of investors’ confidence, leaving investors jumping back into riskier assets.
  • Over the week, FANG+ index constituents Amazon and Alphabet (parent company of Google) reported better than expected earnings, with Amazon surpassing USD 100 billion in quarterly revenue for the first time. Over the week, the FANG+ index rose 8.36%, while the 2x Leveraged 0830EA saw 15.65% gains, ending the week at a record high NAV of RM14.4761, with YTD gains of 18.7%.
  • Following the positive sentiment in the US, Chinese markets also rebounded and the CSI 300 index  and the Shanghai Composite index upped 2.63% and 0.55% respectively in MYR terms.
  • Over the week, China’s new economy sectors become the centre of attention as the Chinese New Year (CNY) approaches. Online sales for CNY totalled RMB344.1 billion for the last 10 days of January, according to sources.
  • The S&P New China Sectors Ex A Share Index outperformed major Chinese indices last week as consumption sectors benefitted from the festive season, rising 8.3% in MYR terms while the 0829EA gained 7.97% to end the week at a record high NAV of RM 9.6196, bringing its YTD gains to 17.07%
  •  Locally, market sentiment also turned positive despite the announcement of another MCO 2.0 extension to the 18th of February. The catalyst for positive market movement could be credited to prime minister Muhyiddin Yassin’s announcement on the planned rollout of Malaysia’s COVID-19 vaccination program by the end of the month.
  • Over the week, the FBM KLCI ended 0.78% in the green, while the Dorsey Wright Technical Leaders Malaysia MYR Index managed to outperform the broader market as the announcement of the vaccine program brought gains to recovery names which were included in the index’s most recent rebalancing activity.
  • The 0836EA, which tracks the index saw 4.13% gains over the week, ending the week at a record high NAV of RM1.1140, with YTD gains of 4.13%.
  • Commodity wise, crude oil prices jumped over the week as the progress in economic stimulus and encouraging outlook regarding of the pandemic brought prices up by 9.73% over the week.
  • Gold prices however did not fare well last week as investors turned to risk assets as markets recovered from its previous dip. The 0828EA dipped 1.88% throughout the week, while the previous metal ended at USD 1,808/oz.

On the Economic Data Front

  • US posts encouraging economic data
    • ISM’s gauge of services PMI rose to its highest level since February to 58.9.
    • Weekly jobless claims fell more than expected to its lowest level since late November, recording at 779,000.
    • Reports also show that  49,000 jobs were added in January, following December’s downwardly revised decline of 227,000.
  •  Eurozone reports GDP data for 4Q2020
    • Eurozone GDP contracted less than expected last quarter, dipping 0.7% sequentially and 5.1% y-o-y.
    • France and Italy’s economies contracted the most in the region, shrinking 1.3% and 2.0% respectively.
  • China’s economic data misses expectations
    • Manufacturing PMI dipped to 51.3 in January but remains in expansion territory
    • Non-manufacturing PMI also showed signs of slowing down in January, recording at 52.4.

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