Market Commentary – January 10, 2022

Kevin Jock

10th January 2022

U.S. tech stocks fell as 10-year Treasury yield hit its highest level since January 2020 after a strong jobs report. The S&P 500 index fell 0.4% on Friday, while the Nasdaq closed 1% lower, created a weekly loss of 4.5%.

European shares slipped on Friday on concerns over rising inflation and surging virus cases. The EURO STOXX 50 index dropped by 0.44%, while the DAX index slipped 0.65%. The European travel and leisure sector fell 1.6% and was the worst performers for the day. In contrast, Deutsche Bank climbed 1.8% to a more than six-month high when the bank’s CFO mentioned that they will reach a key profitability target this year.

In Asia, Japan’s Nikkei 225 index remained nearly flat at the mid-day close. While HK’s Hang Seng index continued to rise on Monday morning, followed by last Friday’s rally. It is up by nearly 0.8%, led by its corresponding Tech Index as it gained 2%.

Oil price dropped marginally during the Monday morning Asian session, trading at around $81.90 per barrel. Bitcoin extended decline below the $42K level against the Dollar, as it has dropped for nearly one week already. CAD/JPY has been rallying since the end of December 2021, with CAD becoming one of the top performing G10 currency. The main thrust of the rally in the pair was the recovery from Covid and the associated rally in commodities.

image_2022_01_10T05_22_30_645Z

Figure 1 (Source: IS Prime) IDX.US.100 Daily : Nasdaq underperforms as hawkish remarks from the Federal Reserve causes re-evaluation in yield sensitive tech stocks.

Headliner to Review

  • The U.S. economy added fewer jobs than hoped in December. Just 199K people found work according to the non-farm payrolls data, hobbled by shortages of workers and persistent threats from the coronavirus. While the unemployment rate dropped to a pandemic low of 3.9%.

Headliner to Watch

  • The Australian retail sales figures are expected to increase by 3.8%.
  • The U.S. Senate Banking Committee will also hold confirmation hearing this week for the appointment of Jerome Powell as Fed chair and appointment of Lael Brainard as vice chair.

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Authors:
Antony Tan
Kerry Man