Market Commentary – February 23, 2022

Kevin Jock

23rd February 2022

Major stock indices in the U.S. dropped broadly on Tuesday, with the S&P 500 index dipped by 1%, taking it to the correction territory as the decline has led it to be 10% below its recent peak back in January. Consumer discretionary and energy stocks are the big laggards of the index. Meanwhile, U.S. president Joe Biden has launched a series of sanctions against Russia, targeting their sovereign debt and largest financial institutions in a hope to cut them off from western financing.

European equities remain almost flat on Tuesday, with the DAX fell by the most at 0.26% as Germany seems to be more vulnerable due to the heavy reliance on Russian gas supplies. Both the automakers and financial services stocks are the top losers, falling between 2.7% and 3.1% respectively.

In Asia, Japan’s Nikkei 225 has dropped further on Wednesday, by nearly 1.7% to trade at around 26,449 points. Both the Chinese A-shares and HK’s Hang Seng index advanced on today, with the food delivery platform Meituan hiked 5%, which is the biggest boost to the HK index.

Oil prices continue to rose with the price of Brent crude increase to as high as $99.50 a barrel as of yesterday, before it traced back to settle at $96.255. Germany has halted the approval of the Nord Stream 2 natural gas pipeline as part of the sanction against Russia. Gold price seems to calm down a bit to settle at $1,898.56 on yesterday, while New Zealand dollar jumped after RBNZ hiked rates as expected on today, with the kiwi dollar climbed to $0.6765.


Figure 1 (Source: IS Prime) SPT.CO.UK : Brent stays elevated heading towards the $100 handle as Ukrainian crisis deepens with Russia’s annexes.

Headliner to Review

  • U.S. Flash Services PMI index increased to 56.7 in February from 51.2 in January, much higher than anticipated. Such boost is driven by international demand for U.S. services which enticed service providers to hire extra staff, which further rise business activities.
  • German ifo Business Climate reading increased to 98.9 points in February from 96 points in January. Which indicated strengthening of the business sentiment as the virus cases have been eased. However, the escalation of the crisis in Ukraine is a potential risk factor.

Headliner to Watch

  • Unemployment claims in U.S. is forecasted to be 233K, down from 248K from the previous week.
  • The newest U.S. preliminary GDP is due to release on Thursday, expect to be 7%.

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Antony Tan
Kerry Man