Market Commentary – April 14, 2022

Kevin Jock

14th April 2022

The U.S. stock markets rallied on Wednesday as investors now shift focus to the first quarter earnings season. Both the Dow and S&P 500 indices rose 1%, while the Nasdaq advanced 2%. Bond yields continue to sink with the two-year treasury yield dropped to 2.27%, while its prices hiked. JP Morgan kicked off the bank earning season and reported a 42% year-on-year drop in net income due to lower fees and higher expenses, as well as losses related to the geo-political conflicts.

Unlike the Wall Street peers, the European equity markets are muted yesterday, with all the regional stock indices remain flat as markets are now waits for this evening’s ECB meeting. The central bank will probably provide guidelines on when interest rates will begin to rise on the back of soaring prices, however, they will not be able to match the tightening paces of the Fed. Meanwhile, U.S. sent additional weapons and intelligence to Ukraine, to support them to repel Russian offensive. Weapons ranging from Mi-17 helicopters, drones to howitzers.

Stocks in the Asia Pacific region were mostly up during the first half of Thursday’s trading session. Australia’s ASX 200 indices gained 0.55%, with the local unemployment rate registered 4% in March 2022. Japan’s Nikkei 225 index advanced 1.1% at the mid-day break, while China’s blue-chip CSI 300 hiked 0.71%. The PBoC (Chinese central bank) is expected to cut the one-year policy loans interest rate on tomorrow, while at the same time to lower the reserve requirement ratio to alleviate the economic impact from the pandemic lockdown.

Oil price dropped on Thursday, giving up part of its gains from the recent rally, with the WTI crude currently trading at $103.27 per barrel. The U.S. is looking to build crude supplies against the tightening market as yesterday’s crude oil inventory figure reached 9.38 million barrels, much higher than the forecasted figure. Gold price was down on Thursday morning but ascended in the afternoon to trade at $1,976.8 per ounce. Dollar index has dropped as the greenback lost ground against most major currencies today.

USDSGD (2022.4.14)

Figure 1 (Source: IS Prime) USD/SGD daily: Singapore Dollar soared against USD after the Monetary Authority of Singapore (MAS) tightened policy on Thursday, aiming for worst drop in 5 weeks and currently at 1.35392.

Headliner to Review

  • UK CPI recorded at an annual rate of 7% last month, up from 6.2% in February, hitting a 30-year high due to the surge of fuel prices which could entice the Bank of England to further increase interest rate again.
  • U.S. PPI came out to be 1.4% for the month, rose above the forecasted figure of 1.1%, mainly driven by prices for food, fuel, and services. Such reading is worrisome because the forward-looking nature of the PPI figure could eventually reach consumers.
  • The Bank of Canada (BoC) has raised interest rate by 50bp to 1%, in line with expectations. It is also the only nation in G7 to implement such aggressive measures which puts pressure on the Fed to follow suit.

Headliner to Watch

  • On Friday, both the U.S. Empire State Manufacturing Index and the industrial production date will be released, expected to increase marginally by 0.9 points and 0.4% respectively.

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Authors:
Antony Tan
Kerry Man