Market Commentary – August 01, 2022

Kevin Jock

1st August 2022

The U.S. stocks rallied again on Friday with all major indices closed up by over 1%. It also recorded their best month since late 2020, mainly due to upbeat earnings results from the tech giants which delivered positive sentiment to the traders. Shares in Amazon jumped over 10% on the day as it beat analyst’s quarterly revenue forecasts, as well as displaying strength in its cloud computing business.

European equities also rose on last Friday and recorded their first monthly gain since the past four months, with strong corporate earnings underpinning the stock markets. All the major indices advanced over 1.5% on the day, with the exception of FTSE 100 as it only rose 1.06%. Oil sectors led the gains as crude prices hiked more than $4 a barrel.

In Asia Pacific, local stocks rose marginally on the day. The Australian shares hiked 0.69% on Monday afternoon, ahead of the rate hike decision from the RBA, while Japan’s Nikkei 225 advanced 0.6% too. On the other hand, Nancy Pelosi’s potential visit to Taiwan has further infuriated China, as there could be military consequences if she eventually decided to set foot in Taiwan.

Price of Brent crude dropped today to $106.912 a barrel, due to weak manufacturing PMI data from China which weighed on the outlook for demand. Bullion price remained almost unchanged today, at $1,765.55 per ounce, while price of bitcoin dipped slightly at $23.27K.

USDTRY chart (2022.8.1)

Figure 1 (Source: IS Prime) USD/TRY daily: The Turkish Lira depreciated progressively against the greenback in the recent weeks, looking to align with the previous lows back in December 2021 at around 18.

Headliner to Review

  • The Canadian monthly GDP in May 2022 printed 0% compared to a 0.3% expansion in April. Although there is no growth in May, but it still beats a monthly contraction of -0.2% in terms of forecasts.
  • Eurozone CPI in July hiked 8.9%, year-by-year, driven by supply-side problems including both gas supply concerns, as well as higher transport costs on food around the uncertainty of Ukrainian supplies.

Headliner to Watch

  • The Reserve Bank of Australia (RBA) is looking to increase interest rate further by 50 basis points to 1.85% on Tuesday, its third consecutive hike over the past three months.
  • The U.S. JOLTS report is expected to print 11 million job openings tomorrow, after 11.3 million openings the month before.

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Antony Tan
Kerry Man