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MNI US OPEN - US Stocks Look to Book Annual Gains of 27%

Executive Summary:

  • Holiday-thinned trade keep volumes muted
  • US stocks look to secure 27% gain across 2021
  • CNH the standout in FX space, looks to finish year close to highs

Figure 1: European NatGas prices tumble further as US LNG heads for Europe

NEWS

RUSSIA/US/UKRAINE (Bloomberg): Putin Satisfied With Biden Call, Sets Stage for Security Talks
Russia expressed satisfaction with the outcome of Thursday’s phone call between Presidents Joe Biden and Vladimir Putin, easing the month-long standoff over Ukraine even as the U.S. repeated its warning to Moscow to de-escalate tensions.

HONG KONG (Bloomberg): Omicron Cluster Clouds Hong Kong’s Virus-Free Streak
Two Hong Kong residents have been diagnosed with Covid-19, marking the first community spread of the virus in nearly seven months to people without a recent travel history or ties to the industry.

CHINA (MNI): PBOC Urged To Seize Dovish Chance Before Fed Rate Hike
The People's Bank of China should take advantage of a window of opportunity to further ease monetary conditions in coordination with fiscal expansion to counter a H1 economic slowdown before a likely rate hike by the U.S. Federal Reserve reduces policy space later in the year, advisors and experts familiar with monetary policy told MNI.

ENERGY (Bloomberg): LNG Fuels Longest Losing Streak in 7 Years for European Gas
European gas fell for an eight day, the longest losing streak in seven years, as supplies improved just as the weather turned warmer. More U.S. liquefied natural gas is heading to the continent, with at least 11 cargoes set to arrive at import terminals in Northwest Europe between Dec. 30 and Jan. 10, according to shipping data compiled by Bloomberg. Russian supplies via Ukraine also increased, with flows at their highest since Dec. 18.

UK (The Times): No need for more Covid curbs, say NHS chiefs
NHS chiefs do not believe that the threshold for new Covid-19 restrictions has been crossed despite a surge in hospital admissions. While concerned by the increase in admissions, NHS leaders have been reassured by the fact that serious illness among the elderly has not risen significantly.

BOND SUMMARY: Euribor futures underperforming SONIA as European bonds closed

With European and Japanese bond markets closed, there have only been limited moves in gilts and Treasuries (both a little higher on the day).

  • A more interesting dynamic is seen in STIR markets, however, with the Euribor strip moving up to 3 ticks lower through the Greens and Blues. This is in contrast to the 2.0-2.5 tick increase in the same maturity for SONIA futures. There's no real reason for the outperformance of SONIA, other than yesterday's story that the UK government may delay some of the expected rise in consumer energy prices that is pencilled in for April - however that story broke yesterday so it more seems to be illiquid markets exaggerating moves.
  • TY1 futures are up 0-1 today at 130-14 with 10y UST yields up 0.5bp at 1.516% and 2y yields unch at 0.727%.
  • Gilt futures are up 0.12 today at 124.90 with 10y yields down -0.2bp at 0.973% and 2y yields down -0.3bp at 0.663%.

FOREX: Dollar Dipping Into Year End

  • The greenback trades generally softer headed into the final US trading session of the year, but the USD Index still looks to secure a 7% rally across 2021. This puts the greenback just behind the CAD as the best performers of the year - with JPY, SEK and the EUR at the other end of the table.
  • In intraday trade, CNH is one of the early standouts in the European morning, with USD/CNH lurching lower and through the 6.3660 support. Pair now trades at lowest levels since Dec9, and now sits around 0.4% above major support at the 2021 low at 6.3305.
  • EUR/CNH taking a similar step lower, edging through 7.20, but still holds above key support at 7.1509. Macro data out of China has been few and far between so far today, but markets possibly playing catch up with yesterday's moves in US equity space, which saw Chinese companies US-listed ADRs surge sharply. The NASDAQ Golden Dragon China Index rose over 9% (biggest daily rise for over a decade).
  • Data and macro events are few and far between Friday, with the early floor close in the US likely to crimp volumes and price action ahead of the close. Most European fixed income markets are also closed.

EQUITIES: European / US indices not following China's lead higher

  • China's SHANGHAI closed up 20.586 pts or +0.57% at 3639.775 and the HANG SENG ended 285.66 pts higher or +1.24% at 23397.67
  • FTSE 100 down 26.54 pts or -0.36% at 7376.53, CAC 40 down 23.31 pts or -0.33% at 7150.12 and Euro Stoxx 50 down 7.06 pts or -0.16% at 4299.23.
  • Dow Jones mini down 33 pts or -0.09% at 36256, S&P 500 mini down 4.25 pts or -0.09% at 4768.25, NASDAQ mini down 22.75 pts or -0.14% at 16409.25.

COMMODITIES: European natgas continues to fall with big LNG deliveries due

  • WTI Crude down $0.45 or -0.58% at $76.52
  • Natural Gas (NYM) up $0.1 or +2.67% at $3.657
  • Natural Gas (ICE Dutch TTF) down $10.06 or -11.51% at $77.3
  • Gold spot up $3.42 or +0.19% at $1817.98
  • Copper up $5.05 or +1.15% at $444.3
  • Silver up $0.09 or +0.41% at $23.1345
  • Platinum down $6.18 or -0.64% at $958.87

MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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