Most major APAC equity markets closed higher, while most US and
European indices were lower. US and benchmark European government
bonds closed sharply lower on the day. CDX-NA closed unchanged
across IG and high yield, iTraxx-Europe was unchanged, and
iTraxx-Xover closed modestly wider. Gold closed lower, silver and
the US dollar were flat, and oil and copper closed higher.
Americas
- Most US equity indices closed lower except DJIA +0.2%; Russell
2000 -0.7%, Nasdaq -0.3%, and S&P 500 -0.1%.
- 10yr US govt bonds closed +11bps/1.32% yield and 30yr bonds
+9bp/2.10% yield. 10s closed at the highest yield since 26 February
and 30s highest since 12 February 2020.
- CDX-NAIG closed flat/51bps and CDX-NAHY +1bp/287bps.
- DXY US dollar index closed flat/90.51.
- Gold closed -1.3%/$1,799 per ounce, silver flat/$27.33 per
ounce, and copper +1.1%/$3.83 per pound.
- Crude oil closed +1.0%/$60.05 per barrel, which is the first
time it has closed above $60 per barrel since 7 January 2020.
- Ford Motor Company has sold its stake in Velodyne Lidar, a
maker of sensors used in the development of autonomous vehicles
(AVs), reports Bloomberg. Ford invested USD75 million in Velodyne
in 2016. The automaker held a stake of 7.6% or 13.07 million shares
in Velodyne at the end of the third quarter of 2020. T.R. Reid, a
Ford spokesperson, said, "This is consistent with our efforts to
make the best, highest use of capital. We are using Velodyne
technology in our autonomous vehicles." Velodyne went public last
year through a reverse merger agreement with Graf Industrial, a
special-purpose acquisition company. Velodyne is one of the
pioneers of LiDAR solutions for advanced driver-assistance systems
(ADAS) and AV applications. (IHS Markit Automotive Mobility's
Surabhi Rajpal)
- The Volkswagen (VW) Group has described itself as an
'unintended victim' of a ruling by the US International Trade
Commission (ITC) over a dispute between South Korean electric
vehicle (EV) battery manufacturers LG Chem and SK Innovation.
According to a Reuters report, VW has found itself in the middle of
a trade secrets dispute between the two battery makers. The US ITC
has ruled in in LG Chem's favor in the dispute. The upshot of this
is that SK Innovation may not import components for domestic
production of lithium ion batteries for Ford's EV F-150 program for
four years, and for VW of America's EV line for two years. VW is
obviously unhappy with this ruling and says it needs to be awarded
the same grace period as Ford in order to work with suppliers to
find an alternative solution to its current contract with LG Chem.
(IHS Markit AutoIntelligence's Tim Urquhart)
- Chart Industries has signed Memorandum of Understanding with
Matrix Service Company to develop standardized hydrogen solutions
in North America. This MoU is in line with both companies' hydrogen
strategy to continue to expand commercial arrangements,
relationships and geographic diversity, thereby utilizing Chart's
expansive hydrogen equipment and liquefaction offerings to develop
hydrogen solutions like hydrogen liquefaction plants, marine
bunkering, fueling stations, plant expansions, storage expansion,
spaceship fueling and other hydrogen related facilities. (IHS
Markit Upstream Costs and Technology's Neeraj Kumar Tiwari)
- Chart Industries has signed a MoU with Svante along with USD15
million investment to develop commercial carbon capture solutions.
The objective of the MoU is to develop an integrated carbon capture
solution using Svante's rapid adsorption technology to capture
carbon directly from industrial post-combustion flue gases and
Chart's cryogenic carbon capture technology to make high-purity CO2
products from industrial flue gas streams, and to further explore
commercial opportunities. (IHS Markit Upstream Costs and
Technology's Neeraj Kumar Tiwari)
- Ecolab today reported fourth-quarter net income down 24%
year-on-year (YOY), to $300.3 million, on net sales down 6%, to
$3.07 billion. Adjusted earnings totaled $1.23/share, down 15% YOY
and slightly short of analysts' consensus estimate of $1.25/share,
as reported by Refinitiv (New York, New York). Growth in healthcare
and sciences businesses was offset by declines in industrial
businesses. Sales decline "stabilized" in the institutional and
specialty, and other, businesses, Ecolab says. (IHS Markit Chemical
Advisory)
- Global industrial segment net sales fell 2% YOY, to $1.54
billion, while segment operating income was up 18%, to $316.4
million. Sales grew in the food and beverage and paper businesses,
but declined modestly in the water business and decline
significantly in the downstream business.
- Global institutional and specialty segment sales fell 21% YOY,
to $881.8 million, while segment operating income was down 62%, to
$94.4 million. Sales declined significantly in the in the
institutional business, and modestly in the specialty business,
with both divisions hit by the second wave of COVID-19 infections
during the quarter.
- Healthcare and life sciences segment sales grew 26% YOY, to
$318.1 million, while segment operating income increased 71%, to
$53.8 million. COVID-19 drove demand higher, leading to higher
volumes across the segment.
- Other segment sales were down 7% YOY, to $283.2 million, while
segment operating income fell 9%, to $43.5 million. A modest
increase in the pest elimination business was offset by declines in
the rest of the segment, including textile care and colloidal
technologies, Ecolab says.
- After the 11.9% month-on-month (m/m) decline in the previous
month, Canadian housing starts soared 23.1% m/m to 282,428 units
(annualized) in January. (IHS Markit Economist Chul-Woo Hong)
- Urban single and multifamily starts skyrocketed 38.1% m/m and
24.1% m/m, respectively. Rural starts plunged 23.4% m/m.
- January's increase in housing starts was concentrated in Quebec
followed by Ontario, despite pandemic restrictions in the
construction industry during the month.
- Single-home building activities will likely remain strong in
the near term.
- Regionally, British Columbia's starts fell for the second
consecutive month, down 17.2% m/m, and Alberta's starts dropped
4.2% m/m.
- The continued upswing in trend housing starts and the much
stronger-than-expected leap in January building will result in an
upgrade to first-quarter residential investment. Last quarter's
building permits trended higher with much of the building activity
spilling into the first quarter of this year.

- The Central Reserve Bank of Peru (Banco Central de Reserva del
Perú: BCRP) directorate opted to hold its policy interest rate
constant at its monthly meeting in February, expressing continued
support for an expansionary stance. (IHS Markit Economist Jeremy
Smith)
- The BCRP's key policy rate, which serves as the reference
interest rate for interbank loans, has been held at 0.25%, - a
historic low for Peru and the lowest policy rate in Latin America -
since March 2020 in an effort to deliver much-needed monetary
stimulus to the Peruvian economy.
- In its monthly monetary policy communiqué, the directorate
affirmed that its current stance is consistent with achieving
annual inflation within the target range of 2% +/- 1% throughout
the next two years, noting that economic output is expected to
remain below potential over that period, thus lowering the
probability of significant upward pressure on inflation.
- The directorate reiterated its intention to maintain a
"strongly expansionary monetary posture" for a "prolonged period".
This stance includes not only a historically low policy rate but
also a wide array of liquidity measures, mostly in the form of
government-backed credit to businesses. As of 10 February, the BCRP
had executed liquidity injections worth PEN64.6 billion, or 9.2% of
estimated 2020 nominal GDP.
- Although the consumer price index rose by 2.7% year on year in
January, inflation expectations remain at 2.0%, the midpoint of the
target range, for 2021 and 2022.
Europe/Middle East/Africa
- Most European equity markets closed lower except for France
being almost flat on the day; Italy -0.7%, Spain -0.6%, Germany
-0.3%, and UK -0.1%.
- 10yr European govt bonds closed sharply lower; UK +5bps,
Germany/Italy +4bps, France +3bps, and Spain +2bps.
- iTraxx-Europe closed +1bp/47bps and iTraxx-Xover
+7bps/243bps.
- Brent crude closed +0.1%/$63.35 per barrel.
- The long-awaited World Health Organization (WHO) approval of
the AstraZeneca (UK) / Oxford University (UK) COVID-19 vaccines
produced in South Korea and India pave the way for the mass rollout
of vaccines through the COVAX program. This will help some
countries, particularly those with no access to vaccines so far, to
start launching their mass vaccination campaigns. (IHS Markit Life
Sciences' Sacha Baggili and Margaret Labban)

- The winners of the United Kingdom's Offshore Wind Leasing Round
4 have been announced. Sweeping the awards in Bidding Area 1
(Dogger Bank) is RWE Renewables. The company secured two regions in
the area for a total of 3.0 GW of proposed project capacity. On par
with this is the consortium of EnBW and BP, with two regions in
Bidding Area 4 (North Wales, Irish Sea and North Anglesey) for a
total of 3.0 GW. Total and Green Investment Group secured 1.5 GW
off the Lincolnshire Coast in Bidding Area 2, and Offshore Wind
Limited, a joint-venture between Cobra Instalaciones y Servicios
and Flotation Energy, was awarded 480 MW in Bidding Area 4, off the
Lancashire Coast. (IHS Markit Upstream Costs and Technology's
Melvin Leong)
- The bidding process has now been concluded and the will
progress to the environmental assessment known as a Plan-Level
Habitats Regulations Assessment (HRA).
- The bidding process and its newly introduced option fees has
courted criticism from various groups such as WindEurope and
RenewableUK. Tenderers had to submit bids for option fees in their
bids, which are payable annually from the award of seabed rights
until the tenderers finalize plans to build the wind farms, up to a
maximum of 10 years. Previously in the United Kingdom, The Crown
Estate had fixed annual option fees.
- The various groups have alleged that the new bidding system
drove options fees upwards significantly to GBP 879 million and
have concerns that this will raise project costs for developers
and, ultimately, consumers.
- January's UK Halifax House Price Index (HHPI) provided fresh
evidence that the 2020 upturn in the housing market is running out
of steam with prices falling at the start of the year and the
annual rate of inflation weakening to its lowest recorded level for
five months. Since December prices slipped by -0.3%, pushing the
standardized house value down to its lowest level since October.
Nonetheless, at just under £252,000, typical values remain close to
November's record. Moreover, prices are still up around £13,000
compared to a year ago (or, in percentage terms, 5.3%). (IHS Markit
Economist Paul Smith)

- Shell New Energies has taken a majority stake (51%) in simply
Blue Energy's Kinsale venture. This effectively gives it control
over the Emerald floating wind project in the Celtic Sea, 35 to 60
kilometers off the coast of County Cork, Ireland. The joint-venture
however will be operated by Simply Blue Energy and supported by
Shell's floating wind experts. The project office will be based in
Cork City Docklands. The first phase of the Emerald project has a
capacity of 300 MW, with the entire project possibly stretching up
to 1 GW of capacity. The wind farm will be located near the Kinsale
gas fields, which are undergoing decommissioning. (IHS Markit
Upstream Costs and Technology's Melvin Leong)
- Variations in COVID-19 virus restrictions and their subsequent
easing, plus divergence across sectors, point to a continuation of
the recent "noise" in economic data across the eurozone and its
member states. We continue to expect a consumer-led growth spurt
from the second quarter of 2021 onwards. (IHS Markit Economist Ken
Wattret)
- Recent data releases have illustrated the exceptional
volatility and divergence of economic indicators across the
eurozone and its member states.
- Eurostat's second ('flash') estimate of eurozone GDP in the
fourth quarter of 2020 saw a slight upward revision to the
initially reported 0.7% quarter-on-quarter (q/q) contraction to
-0.6% q/q. Factoring in revisions to back data, eurozone GDP was
5.0% below its pre-COVID-19 virus pandemic level in the fourth
quarter of 2019 (versus -5.1% in the initial release).
- On an annual basis, eurozone GDP fell by 6.8% in 2020, a record
decline.
- Member states' GDP performance in the fourth quarter last year
continued to vary widely, reflecting a range of influences but
primarily COVID-19 virus effects. Of the larger economies, Austria
(-4.3% q/q) and Italy (-2.0% q/q) underperformed, while Spain and
Portugal (both +0.4%) registered the highest q/q rates of
growth.

- The European Commission considers introducing an EU
deforestation-free label as part of its legislative plans to
improve the protection of forests worldwide. At an online event
organized by the think tank Farm Europe on 11 February, Jorge
Rodriguez-Romero from the Commission's environment department (DG
ENVI) said they are looking at a "broad range of possible measures"
to step up the EU's actions against deforestation, including
labelling but also due diligence, certification and other
requirements. (IHS Markit Food and Agricultural Policy's Pieter
Devuyst)
- France's unemployment rate stood at 8.0% during the last three
months of 2020, according to seasonally adjusted figures released
by the National Institute of Statistics and Economic Studies
(Institut national de la statistique et des études économiques:
INSEE). (IHS Markit Economist Diego Iscaro)
- The unemployment rate declined from 9.1% during the third
quarter of 2020, but it was still up from a reading of 7.1% during
the second quarter. The unemployment rate had averaged 8.4% in
2019.
- The pandemic has injected substantial volatility to the
unemployment figures, making their interpretation more challenging.
Similar to the situation between March and May 2020, the
introduction of tight restrictions in late October led many
potential jobseekers to stop looking for a job. The INSEE also
highlights that the national lockdown also made collecting the data
more difficult.
- Underemployment also rose during the fourth quarter but less
than during the first lockdown. IHS Markit's measure of the U6
unemployment rate, which includes the headline unemployment rate
plus all people marginally attached to the labor force and those
employed part time for economic reasons, rose from 20.5% in the
third quarter to 21.3% in the fourth quarter of 2020. This compares
with readings of 33.3% during the second quarter and an average of
17.8% in 2019.
- A local government in Spain is considering converting Nissan's
soon to be closed vehicle production facility in Barcelona to
manufacturing batteries for battery electric vehicles (BEVs).
Sources familiar with the matter have told Reuters that the
regional government of Catalonia is backing the creation of a
battery production and recycling plant in the region, referred to
as the 'Battery Hub' project. This would be supported by funds
allocated to the Spanish government by the European Union's
COVID-19 virus fund, with sources suggesting that the government is
considering investing in the Nissan site for this use. (IHS Markit
AutoIntelligence's Ian Fletcher)
- Saudi consumer prices edged down 0.2% on the month in January
and rose 5.7% in annual terms, according to GASTAT, the Saudi
Statistical Agency. Price inflation accelerated from 5.3% on the
year in December. Discounting for the increase of the VAT rate by
10 percentage points as of 1 July 2020, which added nearly six
percentage points to annual price inflation, the consumer price
index hardly changed at all. (IHS Markit Economist Ralf Wiegert)
- The breakdown into consumer goods categories revealed that food
prices had the strongest impact on the overall price index as they
went up by 12.6% year on year, with meat and vegetables prices
posting strong leaps. Communication costs also went up markedly
(+13.8% on the year).
- Rentals for housing went down by 1.7% on the year. In monthly
terms, transport prices had the strongest effect as they rose by
2.0% from December. However, overall price dynamics remained muted
in January.
- On 15 February, the IMF reached a staff-level agreement with
the Kenyan government on a three-year USD2.4-billion financing
package under the IMF's Extended Fund Facility (EFF) and Extended
Credit Facility (ECF). (IHS Markit Economist Thea Fourie)
- A multi-year fiscal consolidation approach is to be implemented
under the EFF and ECF to address Kenya's debt vulnerabilities. The
focus will be placed on increasing the government's revenue steam
through higher taxes, tight control of government spending, and
addressing the weakness of state-owned entities (SOEs).
- The IMF expects Kenya's GDP to rebound with 7.6% growth during
2021, from an estimated 0.1% contraction in 2020. The reopening of
schools and lifting of COVID-19-pandemic-related containment
measures underline the growth expectation.
- The IMF's EFF and ECF programs form part of the Kenyan National
Treasury's strategy to steer away from high-interest domestic
borrowing and more towards concessional and semi-concessional
external debt to finance the country's widening fiscal gap. The
National Treasury is expected to raise KES123.8 billion (USD1.13
billion) through sovereign bonds sales in the next four months and
an additional KES124.3 billion for the upcoming fiscal year,
starting in July 2021.
Asia-Pacific
- Most APAC equity markets closed higher, except for India -0.3%;
Hong Kong +1.9%, Japan +1.3%, Australia +0.7%, and South Korea
+0.5%.
- As per IHS Markit's Commodities at Sea, coal and iron ore
discharges during January 2021 at China (Mainland) ports stood at
24.4mt (up 13% y/y) and 105.5mt (up 6% y/y), respectively. (IHS
Markit Maritime and Trade's Pranay Shukla)
- There were healthy discharges of thermal coal into China
(Mainland) despite almost halt in arrivals of Australian cargoes
(0.2mt versus 4.6mt in January 2020). The decline in imports from
Australia got compensated with strong arrivals from Indonesia
(19.3mt, up 88.5% y/y) and Russia (2.5mt, up 88% y/y). During the
reported month there was also discharge of four capes loaded with
South African coal.
- In terms of metallurgical coal, there was just 1.4mt of tonnage
discharged during January 2021 versus 5mt a year ago. The
significant drop in metallurgical coal arrivals was due to the halt
of Australian cargoes into the country.
- In terms of domestic supply in Mainland China, there was a
significant increase in production at the coal mines leading to a
buildup of stockpiles at the pitheads reported to be near capacity.
During this time to contain spread of COVID-19, there were
restrictions on the movement of people during the Lunar New Year
holidays (11-17 February 2021), due to which miners could return to
work sooner leading to a faster resumption of mining
activities.
- Japanese oil company Idemitsu Kosan has partnered with racing
car manufacturer Tajima Motor to market an electric vehicle (EV)
this year, according to Nikkei. The four-seater vehicle would be
2.5 meters long, 1.3 meters wide and will be priced between JPY1
million (USD9,494) and JPY1.5 million. The vehicle's body is made
of high-performance plastic developed by Idemitsu. It will be
powered by lithium-ion batteries and will have a cruising range of
100 km and maximum speed of 60 km/hr. The vehicle may become quite
popular among Japanese people who only travel short distances,
considering its smaller size, lower price and driving range. It can
also become a second car for many people for short grocery runs or
going to places where parking is a problem. (IHS Markit
AutoIntelligence's Nitin Budhiraja)
- Tokyo Electric Power Company (TEPCO) Renewable Power, has
bought a 30% stake of the TetraSpar floating foundation
demonstration project. Other shareholders are Shell (46.2%), RWE
(23.1%), and project developer Stiesdal Offshore Technologies
(0.7%). The TetraSpar concept seeks to bring down the cost of
floating offshore wind and open access to deeper water
installations globally. The developer, Stiesdal Offshore
Technologies, developed the concept and design from a bottom up
approach, working first with manufacturer Welcon to incorporate
simplified manufacturing processes. The development is in its final
stage pilot project. The TetraSpar foundation components have been
manufactured by Welcon, and transported to Grenaa port, Denmark, in
the summer of 2020 where they were assembled over two months. The
Siemens SWT 3.6 130, 3.6 MW wind turbine will be installed at port
and the entire structure towed to the Marine Energy Test Centre
near Stavanger, Norway, in time for its 2021 summer commissioning.
(IHS Markit Upstream Costs and Technology's Melvin Leong)
- The SeaTwirl floating vertical axis wind turbine concept has
been granted a patent by the Japanese patent office. To date, the
developer and inventor, Swedish company SeaTwirl, has obtained
patents in Sweden, the United States, mainland China, and most
recently in 2020, Europe, for the divisible nature of the wind
turbine. The technology allows the wind turbine to be divisible
above and below the house that holds the generator and bearing. The
entire generator and bearing housing can thus be replaced just
above the water surface, reducing costs and downtime for both
installation and maintenance. (IHS Markit Upstream Costs and
Technology's Melvin Leong)
- LeddarTech has partnered with Seoul Robotics to develop
solid-state LiDAR-based perception solution. This will complement
LeddarTech's Leddar Pixell, a 3D solid-state 180-degree LiDAR
sensor, designed for shuttles, robotaxis, buses, and heavy
commercial vehicles. The partnership is aimed at integrating each
other's technical expertise to enhance LiDAR sensor's performance
and robustness as well as to shorten time-to-market and reduce
costs. (IHS Markit Automotive Mobility's Surabhi Rajpal)
- The Indian government is working to formulate a new policy to
develop advanced battery technology for electric vehicles (EVs).
According to a report by the Indian Express, the government is
looking to institutionalize research and development (R&D) on
the next generation of battery technologies for EVs, such as
metal-ion, metal air, and hydrogen fuel-cell technologies, to
replace lithium-ion batteries. Commenting on the plan, Indian Union
Minister Nitin Gadkari said, "About 81% of lithium-ion battery
components are available locally and India stands a very good
chance for value addition at lower costs. Our mining entities could
look for acquiring component assets globally and grab the
opportunity, as China has occupied 51%, but still 49% scope is
there." (IHS Markit AutoIntelligence's Isha Sharma)
- Latest GDP data suggest that Thailand's economic recovery
continued through the final quarter of 2020, as the magnitude of
contraction eased to 4.2% year on year (y/y) in the fourth quarter,
up from 6.2% y/y in the third. Even so, the Thai economy posted the
fastest annual contraction (6.1% y/y) in over two decades,
reflecting the huge blow from the COVID-19 virus pandemic in 2020.
(IHS Markit Economist Jola Pasku)
- Private consumption expanded by 0.9% y/y during the final
quarter on the back of government stimulus measures and special
long holidays. Spending on both durable and non-durable goods
expanded during the final quarter, but not nearly enough to pull
the economy out of negative territory. Private consumption
contracted by 1% y/y during 2020.
- The contraction in private investment eased to 2.5% y/y in the
fourth quarter due to higher investment in machinery and equipment.
This was from higher imports of capital goods from the launch of
new mobile phone models. Investment in construction continued to
contract, but the pace of contraction eased as the sales of
construction materials picked up.
- The government rolled out a USD7-billion fiscal stimulus
package last month in response to the second virus wave, which will
support private consumption somewhat, but will likely fall short of
expediting the economic recovery

- PTT Global Chemical (PTTGC; Bangkok, Thailand) reports that its
fourth-quarter net profit climbed to 6.4 billion baht ($214.3
million) from 374 million baht in the year-earlier quarter.
Quarterly revenue rose by 3% to 87.5 billion baht. (IHS Markit
Chemical Advisory)
- In full-year 2020, revenue fell 20% to 326.2 billion baht.
Sales decreased mainly due to a decline in average selling prices,
on the back of the COVID-19 impact on worldwide economic conditions
and lower demand for end products.
- Net profit plunged 96% to 200.0 million baht from 11.6 billion
baht in the previous year.
- At PTTGC's olefins and derivatives business, the company says
that the average ethylene price in 2020 was $713/metric ton, down
from $823/metric ton in the previous year, due to a weakening of
prices during the second quarter caused by a sharp drop in demand
caused by COVID-19, the lockdown restriction in many countries, and
a slowdown in production among downstream producers. As a result,
the market has been oversupplied, the company says. PTTGC's olefin
plants had an average utilization rate of 97% last year, down from
102% in 2019.
- In the company's aromatics business, EBITDA plunged 88% in 2020
to 79 million baht, versus 650 million baht. The para-xylene
(p-xylene) market was under pressure from the impact of COVID-19,
which led to weaker p-xylene demand from downstream products such
as purified terephthalic acid and polyester.
- The p-xylene market was supported by strong demand for
polyethylene terephthalate (PET) resin because consumers' behavior
switched to focus more on hygiene, which led to higher demand for
PET for food packaging and single-use bottles. Demand for benzene
in late 2020 was strong due to work-from-home arrangements, it
says.
- The company's other business unit is refining.
- Vietnam has joined a handful of other countries worldwide
authorized to export insects for human consumption to the EU, under
the latest European Commission implementing regulation. The
implementing law notes that only countries who can guarantee
production meets EU hygiene and other requirements for insect
farming laid down in the 2017 official controls regulation 2017/625
and a backup 2019 regulation (2019/626). Notably EU law stipulates
that only plant-based substrates can be used to feed the insects,
not meat or other animal products nor manure. (IHS Markit Food and
Agricultural Policy's Sara Lewis)
Posted 16 February 2021 by Chris Fenske, Head of Capital Markets Research, Global Markets Group, S&P Global Market Intelligence
S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.