Investment Daily

22 January 2021

Investment Daily

S&P 500 reached record S&P 500 touches fresh record high high led by tech; In the US, the S&P 500 closed little changed having touched a fresh record high on Thursday, as investors weighed the Biden administration’s strategy to better tackle the Covid-19 pandemic and as the earnings Treasuries fell on economic season continues. Hopes that more fiscal spending would revive economic growth and corporate earnings, and better than expected housing and jobless claims data supported sentiment. The tech-heavy Nasdaq rose data and tracked losses in 0.5%. European bonds US Treasuries fell (yields rose) led by longer-term bonds, on the back of some upbeat economic data and tracking losses in European bonds. 10-year and 30-year yields climbed 3bp and 4bp to close at 1.11% and 1.87%, respectively. European stocks edged lower on Thursday as the ECB kept rates on hold whilst highlighting the near term European stocks were little risks to the economic outlook. Overall, the Euro Stoxx 50 closed 0.2% down as French and German benchmark indices were 0.7% and 0.1% lower. Meanwhile in the UK, the FTSE 100 fell 0.4%. changed; government Most European government bonds fell (yields rose) as the ECB left monetary policy measures unchanged bonds fell as the ECB kept amid a weakening economic outlook as virus developments worsen. In Germany, 10-year yields were 3bp higher to -0.50% as French equivalent yields also rose 3bp. Peripheral bonds underperformed, with 10-year policy on hold Italian yields up 7bp to 0.69%. Asian stock markets retreated on Friday after reaching fresh highs and as further virus restrictions to slow the spread of Covid-19 weighed on optimism. Hong Kong's Hang Seng declined 1.3% following report of a lockdown in an area of the city. Korea's Kospi (-0.6%) and Taiwan's Taiex (-0.8%) were weighed on by Social restriction declines in technology stocks. Japan's Nikkei and China's Shanghai Composite both dipped 0.4%. Crude oil prices ended a choppy session modestly lower on Thursday, with worsening global coronavirus announcements pushed trends triggering concerns over future demand. WTI crude for March delivery edged 0.2% lower to settle at Asian equities lower USD53.1 a barrel.

Key Data Releases and Events Yesterday US housing starts rose by a further 5.8% mom in December to an annualized 1,669,000, surpassing an expected 0.8% mom increase. Barring revisions this would be the fastest monthly pace for residential construction since 2006. Importantly, single home starts – a perceived measure of underlying trends – surged 12% mom. Similarly, authorized building permits advanced 4.5% mom due to the single home category, compared to the expected 1.7% mom decline. The Bank of Japan maintained its key policy interest rate at -0.1% and kept its asset purchase programme unchanged. The central bank assessed that the current state of emergency would weigh on growth and activity in the current fiscal year, however, they were more upbeat about recovery in the next fiscal year starting in April, amid a vaccine rollout and additional government support announced last month. Meanwhile, the European Central Bank (ECB) kept the deposit facility rate unchanged at -0.5% and asset purchases unchanged as President Lagarde highlighted negative developments in the near-term economic outlook due to virus developments. Meanwhile, she emphasised that “nothing is off the table” for ECB policy support and that flexibility is key for asset purchases.

Releases due today (22 January 2021) Country Indicator Period Survey Prior UK Retail Sales ex Autos and Fuel (yoy) Dec 7.4%A 5.3% Eurozone IHS Markit Composite PMI Jan P 47.6 49.1 UK IHS Markit Composite PMI Jan P 45.5 50.4 US IHS Markit Composite PMI Jan P - 55.3 US Existing Home Sales (mom) Dec -1.9% -2.5%

A=Actual Against a winter wave of Coronavirus infections, the IHS Markit US PMIs are expected to cool slightly, to 56.5 for the manufacturing index and 53.6 for the services sector index. Meanwhile, the UK and eurozone IHS Markit PMIs are expected to show a picture of contracting activity in January, concentrated in the services sector, amid tighter Covid-19 restrictions.

Past performance is not an indication of future returns Produced by the Global Investment Strategy Unit ([email protected]) |PUBLIC| Market Snapshot

1-day 1-month 3-month 1-year YTD 52-week 52-week Fwd Close Change Change Change Change Change High Low P/E Equity Indices (% ) (% ) (% ) (% ) (% ) (X)

World MSCI AC World Index (USD) 670 0.2 5.7 15.5 16.0 3.6 671 379 21.0

North America US Dow Jones Industrial Average 31,176 0.0 3.9 9.9 6.8 1.9 31,272 18,214 20.8 US S&P 500 Index 3,853 0.0 4.5 11.6 16.0 2.6 3,861 2,192 23.3 US NASDAQ Composite Index 13,531 0.5 5.6 17.6 44.2 5.0 13,560 6,631 35.1 Canada S&P/TSX Composite Index 17,916 -0.5 2.1 10.1 1.8 2.8 18,059 11,173 17.2

Europe MSCI AC Europe (USD) 509 0.3 4.9 17.5 4.4 2.4 515 307 17.1 Euro Stoxx 50 Index 3,618 -0.2 3.5 14.1 -4.0 1.8 3,867 2,303 18.3 UK FTSE 100 Index 6,715 -0.4 4.1 16.1 -11.3 3.9 7,642 4,899 15.4 Germany DAX Index* 13,907 -0.1 3.6 10.9 2.9 1.4 14,132 8,256 15.9 France CAC-40 Index 5,591 -0.7 2.3 15.2 -7.0 0.7 6,111 3,632 17.8 Spain IBEX 35 Index 8,122 -1.0 2.4 19.5 -15.2 0.6 10,100 5,815 19.0 Italy FTSE MIB Index 22,429 -1.0 2.7 17.6 -5.4 0.9 25,483 14,153 13.3

Asia Pacific MSCI AC Asia Pacific ex Japan (USD) 725 0.7 13.4 23.9 28.0 9.4 727 384 18.8 Japan Nikkei-225 Stock Average 28,631 -0.4 8.3 22.0 19.1 4.3 28,980 16,358 25.2 Australian Stock Exchange 200 6,800 -0.3 3.0 10.1 -4.7 3.2 7,197 4,403 20.9 Hong Kong Hang Seng Index 29,435 -1.6 12.7 18.8 3.9 8.1 30,136 21,139 13.2 Shanghai Composite Index 3,607 -0.4 7.4 8.9 17.8 3.8 3,636 2,647 14.0 Hang Seng China Enterprises Index 11,677 -1.8 12.4 15.8 4.5 8.7 12,006 8,290 10.6 Taiwan TAIEX Index 16,019 -0.8 13.0 24.0 32.2 8.7 16,238 8,524 18.6 Korea KOSPI Index 3,141 -0.6 14.9 33.4 38.5 9.3 3,266 1,439 15.2 India SENSEX 30 Index 49,084 -1.1 6.7 21.0 19.4 2.8 50,184 25,639 29.5 Indonesia Jakarta Stock Price Index 6,307 -1.7 4.7 23.9 1.2 5.5 6,505 3,912 12.0 Malaysia Kuala Lumpur Composite Index 1,598 0.2 -2.1 6.6 1.3 -1.8 1,696 1,208 13.9 Philippines Stock Exchange PSE Index 7,046 -1.3 -2.2 11.1 -5.7 -1.3 7,636 4,039 19.3 Singapore FTSE Straits Times Index 2,990 -0.9 5.7 18.2 -8.1 5.1 3,260 2,208 15.9 Thailand SET Index 1,505 -0.5 5.7 24.0 -4.4 3.9 1,580 969 19.7

Latam Argentina Merval Index 48,473 -3.5 -3.8 -6.2 15.4 -5.4 56,114 22,061 9.5 Brazil Bovespa Index* 118,329 -1.1 1.5 16.1 -0.1 -0.6 125,324 61,691 12.5 Chile IPSA Index 4,579 -1.3 9.3 20.2 -1.9 9.6 4,720 2,851 14.7 Colombia COLCAP Index 1,446 -0.9 3.2 22.8 -12.4 0.6 1,682 881 14.6 Mexico S&P/BMV IPC Index 44,810 -0.7 5.2 15.9 -1.7 1.7 46,925 32,503 15.2

EEMEA Russia MOEX Index 3,423 -1.3 4.7 20.9 6.8 3.1 3,521 2,074 8.2 South Africa JSE Index 64,175 0.1 9.6 17.2 10.9 8.1 64,512 37,178 12.5 Turkey ISE 100 Index* 1,552 -1.1 9.3 28.2 25.1 4.0 1,582 819 7.7 *Indices expressed as total returns. All others are price returns.

3-month YTD 1-year 3-year 5-year Change Change Change Change Change Equity Indices - Total Return (% ) (% ) (% ) (% ) (% )

Global equities 15.8 3.7 17.9 30.6 100.5 US equities 12.9 2.8 20.4 45.4 122.6 Europe equities 17.9 2.4 6.7 7.4 54.7 Asia Pacific ex Japan equities 24.2 9.4 30.8 30.4 124.5 Japan equities 18.3 3.1 17.6 15.6 73.2 Latam equities 22.8 -1.2 -14.7 -14.5 70.9 Emerging Markets equities 24.0 8.9 26.7 21.9 122.3 All total return data quoted in USD terms and subject to one day-lag. Data sourced from MSCI AC World Total Return Index, MSCI USA Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Emerging Latin America Total Return Index, and MSCI Emerging Markets Total Return Index. Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period.

Source: Bloomberg, HSBC Global Asset Management. Data as of yesterday’s respective market close, except for Asia Pacific equity markets, Japanese bond yields. Data for BarCap GlobalAgg, BarCap US Corporate Index, BarCap Global High Yield and LME copper are as of previous two trading days’ market close. All currencies and commodities show today’s data as at 07:50am BST. Past performance is not an indication of future returns 22/01/2021 Investment Daily 2 |PUBLIC| Market Snapshot 2

1-day 1-month 3-month 1-year YTD Close Change Change Change Change Change Bond indices - Total Return (Index Pts.) (% ) (% ) (% ) (% )

BarCap GlobalAgg (Hedged in USD) 595 -0.9 -0.5 0.4 4.2 -0.6 JPM EMBI Global 921 0.9 -0.9 3.5 3.4 -1.3 BarCap US Corporate Index (USD) 3,517 -11.4 -0.7 1.9 7.1 -1.2 BarCap Euro Corporate Index (Eur) 266 -0.3 -0.1 1.2 2.2 0.0 BarCap Global High Yield (Hedged in USD) 547 0.4 0.8 5.9 5.0 0.2 Markit iBoxx Asia ex-Japan Bond Index (USD) 229 0.2 0.0 1.7 5.2 -0.1 Markit iBoxx Asia ex-Japan High-Yield Bond Index (USD) 289 0.4 0.6 3.9 4.1 0.3 Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period.

1-day 1-month 3-months 1-year Year End Bonds Close Ago Ago Ago Ago 2020 US Treasury yields (%) 3-month 0.07 0.07 0.08 0.09 1.54 0.06 2-Year 0.12 0.13 0.11 0.15 1.53 0.12 5-Year 0.45 0.44 0.36 0.37 1.57 0.36 10-Year 1.11 1.08 0.92 0.86 1.77 0.91 30-Year 1.87 1.83 1.65 1.68 2.22 1.64

Developed market 10-year bond yields (%) Japan 0.04 0.03 0.01 0.03 -0.01 0.02 UK 0.33 0.30 0.18 0.28 0.63 0.19 Germany -0.50 -0.53 -0.60 -0.57 -0.26 -0.57 France -0.27 -0.30 -0.35 -0.29 -0.01 -0.34 Italy 0.69 0.62 0.55 0.80 1.35 0.54 Spain 0.12 0.07 0.05 0.22 0.41 0.04

1-day 1-month 3-months 1-year Year End 52-week 52-week Currencies (vs US dollar) Latest Ago Ago Ago Ago 2020 High Low

Developed markets EUR/USD 1.22 1.22 1.22 1.18 1.11 1.22 1.23 1.06 GBP/USD 1.37 1.37 1.34 1.31 1.31 1.37 1.37 1.14 CHF/USD 1.13 1.13 1.12 1.10 1.03 1.13 1.14 1.01 CAD 1.27 1.26 1.29 1.31 1.31 1.27 1.47 1.26 JPY 103.7 103.5 103.6 104.9 109.8 103.3 112.2 101.2 AUD 1.29 1.29 1.33 1.41 1.46 1.30 1.81 1.28 NZD 1.39 1.38 1.42 1.50 1.52 1.39 1.83 1.37

Asia HKD 7.75 7.75 7.75 7.75 7.77 7.75 7.80 7.75 CNY 6.48 6.46 6.54 6.69 6.91 6.53 7.18 6.43 INR 73.08 73.00 73.85 73.54 71.20 73.07 76.91 71.09 MYR 4.04 4.03 4.06 4.14 4.07 4.02 4.45 4.00 KRW 1,103 1,098 1,108 1,133 1,165 1,086 1,297 1,080 TWD 28.17 28.17 28.35 28.77 29.99 28.30 30.49 27.63

Latam BRL 5.36 5.36 5.16 5.59 4.18 5.20 5.97 4.17 COP 3,480 3,480 3,452 3,785 3,332 3,430 4,152 3,340 MXN 19.87 19.73 20.14 20.98 18.69 19.91 25.78 18.52 ARS 86.43 86.43 83.24 78.07 60.07 84.15 86.46 59.99

EEMEA RUB 74.42 73.85 75.90 76.59 61.85 74.41 82.84 61.72 ZAR 15.10 14.94 14.67 16.21 14.33 14.69 19.35 14.31 TRY 7.42 7.37 7.66 7.94 5.92 7.44 8.58 5.93

Latest 1-day 1-month 3-month 1-year YTD 52-week 52-week ago Change Change Change Change High Low Commodities (% ) (% ) (% ) (% ) Gold 1,861 1,870 0.0 -2.2 19.4 -2.0 2,075 1,452 Brent Oil 55.3 56.1 10.3 27.6 -4.9 6.8 58 31 WTI Crude Oil 52.3 53.1 10.9 26.0 -2.1 7.5 54 28 R/J CRB Futures Index 175 175 7.1 15.4 -2.7 4.4 182 101 LME Copper 8,022 8,022 3.5 15.9 31.4 3.3 8,238 4,371

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