Market Commentary – January 14, 2022

Kevin Jock

14th January 2022

Wall Street stocks fell on Thursday led by a sell-off in tech shares, as continued evidence of surging U.S. inflation helped confirm investors’ expectation that the Fed will tighten monetary policy significantly this year. The tech-heavy Nasdaq index dropped 2.5% while the benchmark S&P 500 index slid 1.4%, both closing at the lowest level in more than a week.

European equities were muted on Thursday as losses in defensive sectors were matched by gains in automakers and tech stocks on hopes of improving semiconductor supply. The EURO STOXX 50 index ended largely unchanged at 4,315.90 points, with both FTSE 100 and DAX gained marginally by 0.15% each.

In Asia, Australia shares fell on Friday, poised to snap the third straight weekly gain, weighed down by tech stocks as well as material-related sectors, dragging the bourse further on weak commodity prices, with the ASX 200 index closed down by 1.1%. Meanwhile, Chinese stocks dropped as real estate sector woes continued to weigh on investor sentiment, while recent pandemic outbreaks added to worries about the effect on the economy.

Gold was up on Friday morning Asia and was set for its best weekly gain since November 2021, supported by a weakening dollar index and U.S. Treasury yields, trading at around $1,827.4 per ounce. Brent crude settled at $84.22 on yesterday. While bitcoin price dropped slightly to close at $42.8K.

image_2022_01_14T07_09_36_062Z (1)

Figure 1 (Source: IS Prime) USDCNH Daily : China’s yuan makes steady gains, underpinned by persistent corporate demand ahead of the long Lunar New Year holiday.

Headliner to Review

  • The U.S. Labor Department reported the PPI for final demand rose 0.2% in December, a decline from the revised 1% jump month before as costs of food and energy declined. However, the yearly increase remained near levels not seen since records began in 2010.
  • In the week ending Jan 8, the advance figure for U.S. seasonally adjusted initial claim was 230K, an increase of 23K from the previous week’s unrevised level of 207K.

Headliner to Watch

  • Core retail sales figure from the U.S. is due to announce on Friday, anticipated to show household spending holding flat in December, with a very small hike by 0.2%.
  • The Chinese fourth quarter GDP will be due on next Monday, with a slowdown to 2.3% from 4.9% in Q3 expected, linked to the ongoing pandemic impact as China pursues a zero Covid policy.

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Antony Tan
Kerry Man