Market Commentary – February 16, 2022

Kevin Jock

16th February 2022

Wall Street equities rallied on Tuesday on the flash news that Russia has already withdrew some troops back to their bases, which has eased concerns of an imminent invasion of Ukraine. The S&P 500 index climbed 1.58%, while the Nasdaq increased little over 2.5%. Russian president Putin said yesterday that they are ready to hold dialogue with the west in order to resolve security issues diplomatically.

European shares rebounded from Monday’s losses following the aforementioned news between Russia and Ukraine, with the EURO STOXX 50 index almost climbed 2% at yesterday’s market close. German Chancellor Olaf Scholz met Putin in the Kremlin on Tuesday and said that the withdrawal of troops was a good sign.

Elsewhere in Asia, Australian shares closed higher on Wednesday with the ASX 200 index ascended 1.08%. Healthcare stocks are the top winners after the release of better-than-expected half year earning estimates from the biotech firm CSL. Likewise, China’s A-shares rose as well, on the hopes of further policy ease to support economic growth.

Crude oil prices fell as the Russia-Ukraine tension cools down, with Brent Crude settling at $93.736 yesterday. Gold price dropped as well after it has been risen for seven consecutive days. Meanwhile, major cryptocurrency is trading higher with bitcoin hiking over 3.4%, currently just above $44K.

image_2022_02_16T07_32_15_101Z

Figure 1 (Source: IS Prime) IDX.FR.40 : Volatility rife in French stocks amid recent weeks driven by escalating and subsequent deescalation of geo-political tensions.

Headliner to Review

  • U.S. PPI rose 1% in January, higher than the market forecast of an increase of 0.5%. Global trade disruptions, higher commodity prices and increase in key inputs to production are all the likely factors that pushes up the overall prices.
  • German ZEW Economic Sentiment indicator came out to be 54.3 points in the current February survey, an increase of 2.6 points from last month which indicates an improvement of the economic outlook despite growing political uncertainties.

Headliner to Watch

  • The Fed will release the minutes of their last meeting on tomorrow, with the markets currently focusing on the level of the rate hike instead of the possibilities of the hike. According to the recent survey, around 52% of the economists believe there will be a 50-basis point hike.
  • Unemployment rate in Australia is expected to be 4.2%, in line with the number from last month.

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Authors:
Antony Tan
Kerry Man