Market Commentary – August 29, 2022

Kevin Jock

29th August 2022

U.S. stock market tumbled on Friday after Powell said that they will continue to increase rates to fight inflation, delivering one of the most hawkish messages during the conference in Jackson Hole. All major indices are down on the day, with the tech-heavy Nasdaq indices dropped almost 4% as the sells are broadside across all sectors.

In Europe, regional stocks underperformed on the day as well, with Germany’s DAX leading the losses as investors are worried about the downbeat consumer sentiment data in the continent’s largest economy, DAX indices closed down by 2.26% on the day, while London’s FTSE 100 dropped 0.7%.

Asian shares slid on Monday as the risks of more aggressive rate hikes in both the U.S. and Europe have reverberate across the globe. Both the ASX 200 and Nikkei 225 indices dipped 1.94% and 2.75% respectively, while Chinese stocks flattened just before the mid-day session break. On the other hand, Macau’s second quarter GDP shrank by an enormous amount of 39.3% y/y as the city was impacted severely by the pandemic.

Oil price rose on Monday as WTI crude now inched higher to $94.4 per barrel, due to the comments made by Saudi Arabia as they could cut supply at any time to help stabilize crude prices. Bullion continues to fall today as the Fed signaled more rate hikes in the future, currently at $1,723.34 per ounce. Meanwhile, the U.S. dollar index advanced to a fresh two-decade peak on Monday morning at 109.44.

Bitcoin chart (2022.8.29)

Figure 1 (Source: IS Prime) Bitcoin daily: Bitcoin plummet below the key level of $20K today, after the hawkish comments from the Fed on last week which negatively impacted the price level of all risky assets.

Headliner to Review

  • The U.S. core PCE index fell 0.1% month over month. In terms of y/y, it rose 6.3% in July, down from 6.8% in June. Such lower-than-expected readings are welcomed by the Fed as the PCE is their preferred inflation measure.

Headliner to Watch

  • The German month-to-month CPI figure is due to print on tomorrow, expect to increase slightly by 0.2%.
  • We will also see the release of U.S. CB consumer confidence index, forecasted to tick up to 97.4 compared to the previous month.

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Kerry Man