Macro Roundup (Dec 1)

Published: Dec 01, 2020 08:40 (GMT+8)
The dollar rallied from its lowest level in 2-1/2 years on Monday, as broad risk sentiment soured again and shares on Wall Street fell, with investors disheartened by weakening U.S. economic data and the absence of any traction on another stimulus package.

SHANGHAI, Dec 1 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar rallied from its lowest level in 2-1/2 years on Monday, as broad risk sentiment soured again and shares on Wall Street fell, with investors disheartened by weakening U.S. economic data and the absence of any traction on another stimulus package.

Still, the greenback was on course to post its largest monthly percentage loss since July.

Data on Monday showed that contracts to buy U.S. previously-owned homes fell for a second straight month in October, with the Pending Home Sales Index, based on contracts signed last month, falling 1.1% to 128.9.

Other data showed activity at factories in the Midwest and Texas slowing this month, with the Chicago PMI falling to 58.2 in November from 61.1 in October, likely as a nationwide resurgence in new COVID-19 infections curbed new orders and disrupted production.

Oil declined on Monday on uncertainty about whether OPEC+ would agree to extend its deep output cuts at talks this week, but COVID-19 vaccine hopes kept crude benchmarks on track to rise by more than 25% in November.

Brent crude for January delivery, which expires on Monday, dropped 64 cents, or 1.33%, to $47.54 per barrel. The more actively traded February Brent contract was down 48 cents at $47.77.

U.S. West Texas Intermediate crude for January settled 19 cents, or 0.4%, lower at $45.34 per barrel.

Oil prices have climbed this month, on track for their biggest monthly gains since May, as vaccine developments raise hopes for an economic recovery that could boost fuel demand.

The Organization of the Petroleum Exporting Countries, Russia and others, known as OPEC+, plan to hold wider talks on Tuesday after discussions of key ministers on Sunday failed to reach a consensus.

Gold dropped to a five-month low on Monday and was on track for its worst month in four years as optimism over a swift vaccine-fuelled economic recovery dented allure for safe havens.

Spot gold was down 0.8% at $1,773.56 per ounce, having earlier hit its lowest level since July 2 at $1,764.29, and has shed 5.6% so far this month. U.S. gold futures dropped 0.4% to $1,780.10 per ounce.

“They (investors) are abandoning gold because they feel that the vaccine is going to open up the markets at some point and it looks like the transition is going to be orderly,” said George Gero, managing director at RBC Wealth Management. “It is going to be a long road ahead for gold because there does not seem to be any need for the haven at this time.”

On Wall Street, U.S. stock futures rose on Monday night after the major averages notched sharp monthly gains for November.

Dow Jones Industrial Average futures traded 102 points higher, or 0.3%. S&P 500 and Nasdaq 100 futures advanced 0.4% and 0.6%, respectively.

The Dow rallied 11.8% in November, posting its best one-month performance since January 1987. The S&P 500 and Nasdaq Composite rose 10.8% and 11.8%, respectively, for their strongest monthly advances since April.

On the coronavirus front, data compiled by Johns Hopkins University shows that more than 13 million Covid-19 cases have been confirmed in the U.S. along with over 266,000 deaths. In New York, Gov. Andrew Cuomo said the state was implementing emergency hospital measures as cases continue to rise.

Meanwhile, Federal Reserve Chairman Jerome Powell called the U.S. economic outlook “extraordinarily uncertain.”

“The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months,” Powell said in prepared remarks. “A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”

Talks between the U.K. and the European Union are heading into a “very significant” week, British Foreign Minister Dominic Raab said Sunday, with time running out for the two sides to iron out lingering disagreements over their post-Brexit trading relationship.

In vaccine news, Moderna said Monday that it will request emergency clearance from the Food and Drug Administration for its Covid-19 vaccine after new data confirmed it was more than 94% effective in preventing infections and was safe.

What’s on tap:

China: Caixin/Markit manufacturing Purchasing Managers’ Index for November

Germany: Markit manufacturing PMI for November (final), unemployment rate and change for November

Eurozone: Markit manufacturing PMI for November (final), unadjusted consumer price index (CPI) for November

US: Markit/ISM manufacturing PMI for November

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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