Market Commentary – April 15, 2022

Kevin Jock

15th April 2022

Wall Street stocks closed lower on Thursday ahead of the Good Friday holiday. Both the S&P 500 and Nasdaq indices dipped 1.12% and 2.03% respectively as rising bond yields pressured growth stocks. All three major U.S. stock indices posted weekly losses as the markets are closed on Friday. Elon Musk offered $43bn to acquire Twitter which resulted its share price dropped slightly by 1.7%. However, the company’s board does not welcome such acquisition.

Contrary to U.S. equities, European shares advanced on yesterday as the ECB kept its policy stance largely unchanged and not in a hurry of tightening the monetary policies aggressively. However, they are facing a tough policy trade-off which is more complicated than any other developed markets. The broad benchmark index STOXX 50 hiked 0.54%. On the other hand, the Russian Moskva naval missile cruiser has sunk in the Black Sea, which is a big setback to their offensive in southern Ukraine. The Ukrainian officials said they fired missiles to the ship and are responsible for such strike.

Elsewhere in Asia, Japan’s Nikkei 225 index tracks Wall Street lower, led by the decline of heavyweight tech stocks. However, the losses were limited as investors also bought back stocks ahead of the long weekend, with the index fell slightly by 0.65% before the mid-day break. Markets in Hong Kong are closed today due to the public holiday. In Mainland China, there are almost 45 cities now implementing either full or partial lockdown, which accounts for nearly 26% of the country’s population and 40% of its GDP.

Price of oil has recovered lately from the early decline on Thursday before Friday public holiday as the EU moved forward to adopt a stepwise ban of Russian oil. Bullion pulled back a bit during yesterday’s trading session and we continue to see impressive volatility on it, settled at $1,973.49. Euro dropped significantly yesterday after the latest remarks from ECB, to $1.08 against the dollar, reaching a two-year low.

image_2022_04_15T04_13_11_021Z

Figure 1 (Source: IS Prime) CAD/JPY daily : Canadian dollar hits a multiyear high untouched since 2015 against the Japanese yen as monetary policies diverge between each nations central bank. The BOC had recently hiked 50 bp whilst the BOJ remains dovish.

Headliner to Review

  • Unemployment rate in Australia came out to be 4%, exactly the same as a month earlier. However, employment change in March missed the expected figure of 30K and instead, the actual figure is 17.9K.
  • The ECB has kept its main refinancing rate at 0%, which is expected by the market. During the press conference, Christine Lagarde stressed their gradual timetable for removing monetary stimulus which is quite dovish when compared to other central bank’s movements, in which many of them has already tightened policy including Singapore and South Korea. ECB now could possibly increase interest rates in September.
  • U.S. retail sales rose less than expected last month (0.5% v.s. 0.8%), as high inflation discouraged consumer spending.

Headliner to Watch

  • China will release its quarterly GDP figure on next Monday, expected to be 4.2%. However, the nation’s economic growth is facing large headwinds due to the disruptions caused by the lockdown, which could further hurt consumption and services.

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.

Authors:
Antony Tan
Kerry Man