Market Commentary – February 11, 2022

Kevin Jock

11th February 2022

Wall Street equities tumbled on Thursday after the release of the newest CPI data, which is higher than the forecasts which prompts investors to bet on more aggressive action from the Fed, with a 50 basis points of increase of the rate in March. The S&P 500 index dipped 1.81%, while the Nasdaq dropped over 2%. The real estate sub-index is the largest loser as it fell by 2.9%, as higher interest rates feed into mortgages.

European shares fell marginally lower on Thursday as the heavyweight tech sector drag the indices down, with the broad benchmark EURO STOXX 50 index dropped 0.17%. Tech stocks sank 1.1% after the strong U.S. inflation data, which lead to higher potential rates that could in turn hurt those tech companies with high valuation. In contrast, share price of AstraZeneca closed up by 1.63% as the pharmaceutical company posted a better-than-expected quarterly profit.

In Australia, benchmark ASX 200 indices fell 0.65% during today’s morning session due to the sold off of tech stocks, although the raise of heavyweight miners able to offset some of the losses. Meanwhile, Chinese stocks are up on Friday with the Shanghai Composite Index briefly touched 3,500 points once again, driven by local property developers as the sector is gaining easier access to presale proceeds followed by reports. HK stocks remain nearly flat before the mid-day break.

Oil price dropped slightly on early Friday as investors are still waiting for the outcome of the talks between U.S. and Iran. Both gold and bitcoin prices dipped slightly yesterday, to settle at $1,826.71 and $43.7K respectively at market close. U.S. dollar remain firm after the inflation figure with the Dollar Index currently at 96.

image_2022_02_11T04_54_47_200Z

Figure 1 (Source: IS Prime) USD/THB Daily : Thai baht touches multi-month highs as the Bank of Thailand anticipates their first rate hike in Q3 once the economy returns to pre-covid levels.

Headliner to Review

  • U.S CPI rose 7.5% last month compared with Jan 2021, which is above the economists’ estimation of 7.2% due to higher prices on food, energy and housing. It is the highest annual hike since Feb 1982. The month-to-month figure hiked 0.6% which is also above market expectation of an increase of 0.4%.
  • U.S. unemployment claims in last week fell to 223K as Covid-19 cases continue to drop, consolidating the labor market’s strength.

Headliner to Watch

  • UoM consumer sentiment data of the U.S. will release in the evening, it is widely expected to pick up after being subdued by the Omicron wave in January, with the figure reaching 67.2.
  • The Swiss PPI is due to announce on next Monday, previously it contracted by 0.1%.

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Authors:
Antony Tan
Kerry Man