Market Commentary – August 04, 2022

Kevin Jock

4th August 2022

U.S. stocks has regained some momentum on Wednesday, after two days of losses as tensions with China eased slightly. The blue-chip S&P 500 closed up 1.6%, while the Nasdaq indices up by 2.6%. In contrast, their government debt encountered selling pressures after several Fed officials indicated that they are willing to act more to tame inflation, with the 2-year bond yield surged to 3.13%.

In Europe, local shares advanced yesterday on upbeat corporate earnings, which offset gloomy economic data from the region. The FTSE 100, CAC 40 and DAX rose by 0.49%, 0.97% and 1.03% respectively. Meanwhile, the U.S. Senate approved both Sweden and Finland’s accession to NATO, as it become the 23rd NATO country to implement such approval.

Asian equities rose on today, following the rallies from Wall Street overnight. Japan’s Nikkei 225 index rose 0.61% after the mid-day break, while HK’s Hang Seng Index shot up 1.6%, above the key level of 20,000 points. On the other hand, China implemented live-fire military exercises surrounding the water of Taiwan as a punishment. They have also suspended the imports of various food products to the island.

Oil price dropped further yesterday, to the weakest level since February after the surge of U.S. crude oil inventories, as well as the agreement reached by OPEC+ of raising oil output target by 100K barrels per day. Price of Brent crude dipped below $100 a barrel. The New Zealand Dollar appreciated against the greenback recently, from the previous low of 0.60605 about one month ago.

AU200 chart (2022.8.4)

Figure 1 (Source: IS Prime) ASX 200 daily: The Australian blue-chip index hit a two-month high on Thursday, boosted by both banking and tech stocks as upbeat economic data improved investor’s risk appetite.

Headliner to Review

  • Unemployment rate in New Zealand rose unexpectedly in the second quarter to 3.3%, from the record low of 3.2% in the first quarter. Likewise, wages increase at the fastest pace in 14 years which suggest that the central bank could keep raising interest rates aggressively to curb inflation.
  • The latest U.S. ISM Services PMI beat the estimated figure of 53.5 to 56.7 points in July.

Headliner to Watch

  • The U.S. nonfarm payrolls report is due to release on Friday, we shall see if employers will keep hiring in July after 372K jobs were added in June. It is forecasted that there will be 250K jobs added in July.
  • Unemployment rate in Canada is expected to tick up marginally to 5%, from 4.9% the previous month.

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Authors:
Antony Tan
Kerry Man