Market Commentary – April 13, 2022

Kevin Jock

13th April 2022

The U.S. equity markets ended up lower on Tuesday, gave up all its gains from the earlier trading sessions after oil prices jumped almost 6%, which undermined investor’s positive reaction to the release of US CPI data. Both the S&P 500 and the Nasdaq indices dropped 0.3%. The 10-year U.S. Treasury yields dipped slightly to 2.72%, while the yield of the two-year note fell further to 2.4%.

European shares declined yesterday, with bank stocks the worst performers as both Deutsche Bank and Commerzbank down more than 9% and 8% respectively, after an undisclosed investor sold off large stakes of the respective shares. Both the FTSE 100 and DAX indices fell almost 5%. Meanwhile, Ukraine’s finance minister urged Western nations to grant financial aid of tens of billions of dollars to fill the fiscal deficit caused by the war. It has been estimated that the damage to civilian and military infrastructure reached $270bn so far.

Elsewhere in Asia, Japan’s Nikkei 225 index has finally stabilized on today, closed higher by 1.93% after it dropped six days in a row. HK’s blue-chip Hang Seng Index also closed slightly higher by 0.26%, at 21,374.37 points. In Shanghai, local government has unveiled plans to ease the strict lockdown through the lifting of restrictions in specific residential areas. In contrast, U.S. orders non-essential consulate staff to leave Shanghai after detailed scrutiny of the conditions in the city.

Brent crude price rose on Wednesday to $106.4 a barrel, after Moscow said that peace talks with Ukraine had hit a dead end, causing supply-side worries. Bitcoin price trading just above $40K, while GBP/USD pair flat-lined near 1.3000 psychological mark following the release of hotter-than-expected UK consumer inflation figures.

XAUUSD chart (2022.4.13)-1

Figure 1 (Source: IS Prime) Gold daily: Bullion price edged higher in the recent days due to a variety of factors, including war in the Ukraine, inflationary pressure as well as lower growth in China caused by the COVID lockdown, which induced investors to seek out for the traditional safe-haven asset.

Headliner to Review

  • U.S. CPI rose from 0.8% to 1.2% in March, in line with expectations. However, the annual CPI figure increased to 8.5%, the highest inflation in 40 years, driven by higher energy and food prices caused by the Russian-Ukraine conflicts. Such staggering level of increase could entice the Fed to act more aggressively to curb inflation.
  • The German ZEW Economic Sentiment declined in the current April survey, fell to -41 points. Experts are pessimistic about the current situation of the economy, however, a drop in inflation expectations offer some hope.

Headliner to Watch

  • Unemployment rate in Australia is expected to decline further, forecasted at 3.9% compared to 4% from the previous month.
  • The ECB will announce its main refinancing rate on Thursday, expected to remain at 0%. However, the key point would be the testimony delivered by the ECB President Lagarde during the press conference, as she needs to find a policy balance to clamp down rampant inflation while propping up a weak growth outlook.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Antony Tan
Kerry Man