Holiday Hangover Holiday Hangover Holiday Hangover

Holiday Hangover

Equities 5 minutes to read

Summary:  Traders rang in the new year with much of same spirit that invigorated risky assets throughout the year prior, the push, pull of vaccines VS. virus spread.

Traders rang in the new year with much of same spirit that invigorated risky assets throughout the year prior. The push, pull of vaccines and mounting virus spread continues to drive sentiment.

Globally COVID-19 infections pushed through 85 million and daily cases in the US hit a record. The highly contagious mutant strain likely to add to this record in coming weeks. With the pandemic showing few signs of slowing, the end of year party that saw the S&P 500 up almost 20% in the final 2 weeks of the year hit the pause button. Taken in the context of the final trading weeks of 2020, Wall Street’s drop to kick off the year is nothing to write home about. Another factor reminiscent of 2020, dip-buyers are still in play as investors look forward to an improved global economy in 2021 – we are closer to the beginning of the end, than the beginning – with ongoing stimulus spending and vaccine rollouts on top.

In Asia trade, regional indices took a sanguine approach to US stock’s slide and bitcoin recouped some of its losses, following a plunge of as much as 17% on Monday – that, again at the risk of losing perspective, revisited levels of 3 days prior. The parabolic gains across the notoriously volatile crypto space cannot be expected to be anything but correction prone, albeit within a broad move higher.

Traders are now holding out for the next risk event, today’s runoff Senate elections in Georgia, which will determine whether Democrats have a deciding vote  – if the Dem’s win both seat, Kamala Harris will have the deciding vote in Congress.

With a Democrat bent in the Senate the expectations of big fiscal, higher taxes and anti-trust scrutiny for big tech come back in to play. 10-year breakeven rates, now above 2%, are already marching higher, a renewed “blue wave” could further boost this move, along with continued topside break out for longer dated yields.

Should the Democrats take the final 2 run-off seats, the reflation trade should get a fresh kick with an incoming Biden already spruiking the $2000 stimulus cheques back on the table. The USD should continue its precipitous slide with more weight behind the big fiscal and Yellen Treasury/Dem Senate MMT push. And multiple highflyers/long duration stocks could feel the pinch of reflation, higher long bond yields and for big tech, antitrust scrutiny.

In FX, following through yesterday’s move and in keeping with the weaker USD theme, USD/CNH continues to slide blasting through 6.44 and pushing toward 6.42, a lead for $Asia lower. The stronger CNY fix doing little to pushback on bullish yuan traders, along with news the NYSE is scrapping delisting plans for Chinese Telcos.

With the incoming hurdle of the run-off elections and short term froth/retracement risk aside, there is little change in our overarching view of late 2020 that Emerging markets, Asia, Commodities and bets on higher inflation (base effects, pent up demand and supply crunches) are the place to be. Alongside a shift in market leadership toward more cyclically orientated stocks, sectors (energy, materials, industrials, financials and travel and leisure stocks), and geographies, with 2020’s highflyers hampered by rising long end yields. Factors which are a positive catalyst for the cyclically weighted ASX 200 index in the year ahead.

Higher inflation, a synchronised global growth reacceleration and easy central banks against the backdrop of more fiscal stimulus, keeps bears at bay sustaining gains across preferred exposures as economic recoveries resume into Q1.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.