Market Commentary – February 2, 2022

Kevin Jock

2nd February 2022

Global sentiment shrugs off doom and gloom to rebound violently as Wall Street post three consecutive days of advances. The rally comes amid Federal Reserve members taking a step back from previous week’s hawkish remarks alongside strong earnings report from Alphabet and Advanced Micro Devices. Suggesting companies are adapting in navigating prevailing supply chain bottlenecks.

Mirroring their US counterparts, European benchmarks pulled higher regardless of market expectations that the ECB is set to hike atleast twice in 2022 ahead of Thursday monetary policy press conference. ECB President Lagarde attempted to sour expectations the previous Thursday, noting the central bank anticipates inflation below 2% in Q4 and that rate rises is “very unlikely”. Across the channel, UK retailers suggest otherwise as British Retail Consortium finds business raising prices at their fastest pace in 9 years across various goods. Tensions between Ukraine and Russia remains a balancing act with the UK Prime Minster most recently promising $119M in aid for former Soviet nation.

Much of Asia’s markets remain closed for business amid Chinese New Year. Nonetheless, COVID cases in Hong Kong continue to spiral out of control as the government confirms another 129 cases on Tuesday despite attempts in containing community transmissions through mini-lockdowns. Overnight risk-on euphoria saw the S&P200 gap higher, alongside the Nikkei225 rallying on open, up 1.3% thus far.

Despite India’s steps in legitimizing cryptocurrencies via a proposed 30% income tax on the asset, bitcoin remained steady on the 38,000 handle. Appeal for the US dollar continues to soften whilst volatility on gold was lacklustre following last week’s tumble. Crude fluctuates at highs ahead of OPEC+ regardless of an anticipated 400,000 barrel-a-day increase.

NAS

Figure 1 (Source: IS Prime) IDX.US.100 Daily : February rebounds violently as fast as January’s pessimistic tumble for Tech as FAANG earnings show resilience despite economic pressures.

Headliner to Review

  • Canadian GDP grew at a faster pace at 0.6% than expected across all sectors of the economy with consumer demand still a pivotal driver force.
  • JOLTs Job openings in the US illustrates a growing employees market as openings increased from 10.78M to 10.93M
  • US manufacturing PMI slowed from 58.7 to 57.6, supply chain bottlenecks still an on-going issue

Headliner to Watch

  • Labour market in New Zealand improved with the rate of joblessness declining to 3.2% from 3.3%.
  • ADP non-farms from the US expected to increase by another 185K with employer demand rising.
  • OPEC+JMMC meeting, expecting an 400,000 bbl increase whilst US crude inventories expected to remain in surplus at 1.8M.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Kerry Man