Market Commentary – February 21, 2022

Kevin Jock

21st February 2022

U.S. stocks continue to slide on Friday as traders closely evaluate the developments of the ongoing tension between Russia and Ukraine. Both the S&P 500 and Nasdaq indices fell 0.7% on the day, which brought the decline to 1.6% and 1.8% respectively on a weekly basis. As today is the U.S. public holiday, hence, it is anticipated that the investors are likely to reduce their positions ahead of the long weekend under such volatile market environment. Meanwhile, the Vix volatility index briefly surged towards 30, which is an indication of market stress. Although it has retraced back to 27.79 at the market close but it is till above its long-term average.

European equities have encountered broadly sold-off on Friday as well, with caution overtook the market as separatists in eastern Ukraine plan to evacuate region’s residents to Russia. However, U.S. Secretary of State agreed to meet with Russia’s foreign minister in this week which could at least ease the market conditions to a certain extent. The broad benchmark EURO STOXX 50 lost 0.95% at Friday’s close and it has already dropped for three consecutive days.

Australian shares opened low on Monday, following Wall Street’s decline on last Friday but it regained its losses to trend higher. Chinese equites slid slightly at the market open, with the closing ceremony of the Beijing Winter Olympic Game already held on Sunday evening, along with the number of medals gained by the Chinese team reaching a record high. Meanwhile, Hong Kong has begun to construct the mobile cabin hospital as a temporary quarantine facility under the assistance of the teams from mainland China and at the same time, the chief executive of HK confirmed that there is not going to be a full-scale citywide lockdown at the current stage.

Price of Brent Crude ended the week lower to settle at $93.97 per barrel on last Friday’s market close, which snapped off eight consecutive weekly advances. Gold price closed the week up once again, which has led to three weeks of continuous hike, as the yellow metal continue to shine as one of the primary safe-haven assets under turmoil conditions. Bitcoin price dipped below $40K on last week to currently trade at $39.24K.

image_2022_02_21T03_23_29_706Z

Figure 1 (Source: IS Prime) EUR/SEK : Swedish krona underperforms against the Euro as the Riksbanks fails to follow the ECB’s hawkish stance.

Headliner to Review

  • UK’s retail sales figure jumped 1.9% in January compared to 1.1% of forecasted figure, both non-food stores sales volumes and automotive fuel sales volumes contributed to such gains.
  • Finance ministers and the central bank governors of the G20 countries met in Jakarta on Friday to agree upon a coordinated approach to global recoveries from the pandemic, with policy normalisation and tackling high inflation being the important discussion point during the summit.

Headliner to Watch

  • Both the Flash Manufacturing PMI and Services PMI are due to announce in the U.S. on Tuesday, expected to increase to 56.2 and 53.2 points respectively.
  • German ifo Business Climate index is expected to rise to 96.8 from 95.7 in the previous month.

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Authors:
Antony Tan
Kerry Man