NAB Morning Call

Wednesday 2nd December 2020There’s a positive vibe about this morning, pushing equities higher and Treasury yields have seen a sharp rise too. NAB’s Tapas Strickland says it's down to a number of factors – stronger than expected Caixin PMI numbers from China, fast-tracking of vaccines, news that US stimulus talks are back on the table and reports that UK-EU trade negotiations have entered the tunnel. The only downside today has been a delay in reaching an agreement by OPEC – they'll try again on Thursday. Today we see the numbers for Australia’s Q3 GDP, which is expected to bounce back sharply. The RBA didn’t have much to say yesterday, avoiding any signals around whether it will extend, stop or reduce its QE program.

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Monday 30th November 2020The pound has already recovered the losses it made on Friday, when Brexit rhetoric was ramped up on both sides of the English Channel. Over the weekend, though, reports suggest talks have been far more productive, tackling the last sticking point of fishing rights, and there’s a real possibility that a deal could be reached in the early part of this week. NAB’s Rodrigo Catril says the deal could include a new transition period, just for fish! Meanwhile, relations between Australia and China remain tense, even if it is having little influence on currencies or equities just yet. Today’s China PMI numbers will confirm how well the country is doing, compared to the rest of the world right now. But it’s been an incredibly strong month for global equities, spurred on by vaccine news, even though US infection rates continue to rise.

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Friday 27th November 2020There are some questions over the numbers provided in phase three of the Astra Zeneca vaccine trial. NAB’s David de Garis says the concern is over the age of participations in the subset who achieved the highest level of efficiency. The makers claim a rerun of trials won’t slow progress, although some believe it could delay entry into the US. The ECB’s Philip Lane expressed concern about tightened of credit standards which could impede the European recovery. Meanwhile, lockdowns are being extended in parts of Europe. And on a quiet day in the markets, the pound is lower, with another day passing without any Brexit progress.

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Thursday 26th November 2020It’s Thanksgiving today in the US and markets have been cautious ahead of the holidays. Vaccine hopes have been pushed aside after Wednesday’s post first-wave high for COVID fatalities in the US. There was also a string of disappointing data, including a rise in unemployment claims for the second week in a row. NAB’s Ray Attrill gives us his reaction to the FOMC meetings, hot off the press. Plus, the UK's Rishi Sunak paints a glum picture for the UK economy, but manages to avoid mentioning Brexit. A quiet data for global data, but at home private capex number, with a wide variety of opinions on what they’ll actually come out at. And what’s going on with the Kiwi dollar?

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Wednesday 25th November 2020President Trump made an appearance before cameras today to boast about the rise in equities, with the Dow breaking 3,0000 for the first time. NAB’s Rodrigo Catril tells Phil Dobbie it’s in part down to the relief that the Biden administration has now been given access to the handover process for the White House. It’s mixed with continued optimism around vaccines, which is seeing stocks that have suffered, like airlines, starting to bounce back. Oil is also back to pre-pandemic prices. The news that Janet Yellen is likely to be Treasury Secretary has also has a positive impact, whilst in New Zealand the request from the Finance Minister for the RBNZ to consider control house prices as part of its remit has seen sharp moves in bonds and the NZ dollar. Meanwhile, COVID numbers in the US continue to cause concern, even though it seems to have slipped the concern of investors right now.

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Tuesday 24th November 2020Astra Zeneca announced the results of their trials, with efficacy up to 90 percent with a drug that is cheaper to produce and easier to distribute. Yet the markets were cautious in their response, although equities are on the rise and tech stocks are taking a back seat. NAB’s David de Garis talks through the response, with the US dollar also spurred on by better than expected Markit PMI numbers for the US. Donald Trump is still in the White House and trying to build a western alliance to play it tough against China, although the response has been somewhat muted. The pound has strengthened on Brexit hopes even though there’s been no specific news. And it’s the Victoria budget today, with a focus on infrastructure spending.

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Monday 23rd November 2020NAB has revised its forecasts for growth in the Australia economy. NAB’s Tapas Strickland talks us through it, plus Josh Fryenberg’s plans to boost invest from larger corporations. Meanwhile, markets continue to respond to COVID-19 infection rates, punishing equities in the US, with growth switching to Europe. There’s been a spat between the US Treasury and the Fed with Steve Mnuchin wanting to see the Fed return unused funds from emergency lending programs. And stand by for a Brexit deal – something has to happen this week, surely.

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Friday 20th November 2020Schools out for winter in New York as COVID cases in the US continue to rise, with the country passing a quarter of a million deaths from the virus. Phil Dobbie talks to NAB’s Gavin Friend about how the markets are more focused on the short-term economic hit than the longer-term vaccine fuelled positive outlook The short-term hit was demonstrated, however, by a sharp increase in unemployment claims in the US. The reverse was the case in Australia yesterday, but worsening relations with China add another dimension to local markets. And Brexit talks have been delayed by a senior negotiator on the EU side contracting COVID-19, but Gavin reckons we can still expect positive news next week and the pound is behaving as though that is the case.

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Thursday 19th November 2020Markets continue to be torn between the good news and the bad news. On the positive side, Pfizer is set to apply for emergency authorisation for its COVID-19 vaccine. NAB’s David de Garis says you’d have expected the news to have created more of a risk-on mood but, on the negative side, infection rates continue to rise. The spike in South Australia, with the six day statewide lockdown, has shown Australia is not immune. Beyond the virus, there’s hope that a UK-EU trade agreement will be announced next week, and the world is preparing for a different political outlook as the Biden administration gets set to move into the White House.

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Wednesday 18th November 2020There was no new vaccine news overnight and the markets seemed a little disappointed by that, with equities down and a move to government bonds. But NAB’s Tapas Strickland says this respite could be short lived, with the results of the Oxford vaccine trials imminent. Meanwhile, there seems to be less of a temptation to take an overly negative view despite the rising COVID-19 cases and sluggish retail sales in the US. The pound has been helped by positive talks around Brexit, although it’s unlikely any deal will be reached this week. And central banks are suggesting that financial regulators are stopping investors dipping into their savings.

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