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Pricing perfection

Market confidence soared as the 46th US President was sworn into office overnight. Asset prices now reflect a perfect 2021 – ongoing stimulus and economies roaring back to life as vaccinations banish the Covid-19 virus. The US dollar and the Euro slid as safe haven demand switched to gold, and the Nasdaq 100 set yet another record high.

The gains for growth exposures seemed to ignore bad news. German Covid death rates are still climbing, and analysis of a South African strain of the virus suggests available vaccines are less effective than previously thought. Investors instead began speculating on further US fiscal stimulus beyond the $1.9 trillion already promised. The enthusiasm for growth boosted already buoyant crude oil and base metal prices.

The new high tide mark for the tech heavy Nasdaq indices was assisted by a 17% post result lift in Netflix. In an echo of macro themes, investors ignore disappointing earnings and focussed on higher than forecast subscriber growth. Last night reports once again highlighted stellar results from the financial sector. Both Zion Bancorp and Morgan Stanley shot the lights out. Tonight’s headliners include Gilead Sciences, Keycorp, Travellers Group and United Airlines.

Unsurprisingly, futures point to a strong start for Asia Pacific stocks this morning.

The weakening US dollar and stronger commodity prices are supporting the Australian and New Zealand dollars in early trading.

Australian employment data is due later this morning. Economists expect 50,000 new jobs in December, bring unemployment down to 6.7%. Initial jobless claims in the US are expected to fall to 935,000, following December’s shock non-farm payrolls read.

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