Market Commentary – February 14, 2022

Kevin Jock

14th February 2022

U.S. stocks dropped heavily on Friday due to the escalated geopolitical tension between Russia and Ukraine, as the possibility of a potential Russian invasion has increased since it has assembled more than 130K troops along the border of Ukraine as well as in Belarus. Such uncertainty is likely to keep market volatility elevated in the near term. All the three major U.S. indices were down at the market close with the Nasdaq fell by nearly 2.8%.

European shares were also down on Friday, dragged by tech stocks with the sector fell 2.2% due to elevated debt yields. EURO STOXX 50 dipped 1%, but it is up for the week after 4 weeks of consecutive declines, at its best weekly performance since early Jan 2022. Travel and leisure shares were the top performers in the week, hiked 7.4% on more lenient mask mandates in the U.S.

In Asia, Australian stocks is up on Monday, supported by the high-flier gold related stocks as the ASX 200 benchmark index rose by 0.6%. However, stocks of other major Asian markets are down due to the Ukraine fears, with Japan’s Nikkei 225 slid by 2.62% at the mid-day break, while HK’s Hang Seng index dropped over 1% during the morning trading session.

Price of oil rose dramatically with the U.S. oil settled at above $94 per barrel on last week. Gold has sky-rocketed to hit 3-month high, reached as high as $1,865 as investors seek out for safe-heaven assets on the back of heightened fear of Russia-Ukraine War. HK dollar has depreciated dramatically against the greenback on last week, briefly broke above to 7.80396 at its highest point on Friday.

image_2022_02_14T03_17_57_829Z

Figure 1 (Source: IS Prime) SPT.CO.UK : Brent prices surge pass $95 amid rising tensions on Eastern Europe. The IEA remarked that the prices could even go higher due to a lack of supply.

Headliner to Review

  • The February U.S. UoM Consumer Sentiment index came out to be 61.7, falls way short of the expected figure of 67.5. Largely driven by high inflation which dented personal financial prospects as the U.S. citizens becoming less confident of the government’s economic policies.
  • UK GDP fell by 0.2% in December 2021, with the service sectors are the main contributor of such decline as it dropped by 0.5%.

Headliner to Watch

  • German ZEW Economic Sentiment index is due to release on Tuesday, expected to be 55.1, much higher than the previous month’s figure of 51.7.
  • U.S. month-to-month PPI is forecasted to hike by 0.5% compared to 0.2% previously.

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Authors:
Antony Tan
Kerry Man