Market Commentary – August 16, 2022

Kevin Jock

16th August 2022

U.S. stocks continue to rally on Monday as investors are now more optimistic about the Fed’s next movements of less stringent monetary tightening. The Dow rose 0.45%, while the Nasdaq indices advanced 0.62%. Share price of Moderna hiked over 3% after the British regulator approved its COVID-19 booster that targets specifically on the Omicron variant.

European shares remained steady yesterday as it hovered near two-month highs, with the major indices including FTSE 100, CAC 40 and DAX rose marginally by 0.11%, 0.25% and 0.15% respectively. Defensive sectors including healthcare and consumer staples related shares are the biggest boosters on the day.

In Asia, performance of the regional stock markets is mixed, with the Australian indices hiked by 0.51%, while the Chinese market is almost flat in the afternoon trading sessions as its central bank cut the medium-term lending rate on Monday to 2.75%. HK’s Hang Seng Index dipped by 0.5%, again below the key benchmark of 20,000 points.

Price of WTI crude dropped dramatically on Monday on the back of weaker than expected U.S. and China data, currently it trades below $90 per barrel. Gold price dropped below $1,800 per ounce yesterday, after a strong rebound in the past two weeks, while bitcoin price continues to trade in a narrow range-bound without much volatility.

AUDUSD chart (2022.8.16)

Figure 1 (Source: IS Prime) AUD/USD daily: The Australian dollar extended yesterday’s losing streak today, as poor economic data hurt pro-growth currencies including AUD.

Headliner to Review

  • Retail sales figure in China missed economists estimates in July, at 2.7% v.s. 5% expected due to continued coronavirus lockdowns.
  • GDP data in Japan improved in the 2nd quarter as it increased by 0.5%, though still below the forecasted figure of an increase of 0.7%.

Headliner to Watch

  • The Reserve Bank of New Zealand will meet tomorrow, and it is widely expected that they will continue to increase interest rates by 50bps, taking the cash rate to 3%.
  • The U.S. monthly retail sales figure is projected to only increase by 0.1% in July, compared to June’s 1% gain.

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Kerry Man