Market Commentary – January 17, 2022

Kevin Jock

17th January 2022

The major U.S. stock averages ended mixed, as earnings reports from financial firms, weaker than expected retail sales, and falling consumer sentiment kept equities down most of the session. A late rally lifted the S&P 500 and Nasdaq into positive territory, while the Dow closed down by 200 points. JP Morgan was the worst performing stock after the bank’s earnings report and forecast led to a sell-off of its shares, down by 6.15%.

European shares fell on Friday after hawkish remarks from central bank officials caused worries over the impact of tighter policy, with the ECB president Christine Lagarde said the bank is ready to take any measures necessary to bring inflation down to its 2% target. The EURO STOXX 50 index dropped by 1% and nearly all sectors, regional stock indexes were in the red territory.

In Japan, the Nikkei share average rose on Monday, as a sustained rally in oil lifted energy shares, while chipmakers followed their U.S. peers higher. China stocks rose as well, after the country’s economy grew faster than expected in the final quarter of 2021 but the growth was still at its weakest pace in 1.5 years, prompting the central bank to unexpectedly cut loan rates, with the blue-chip CSI 300 index up by 0.86% at the mid-day close.

Oil prices edged up on Monday as investors bet supply will remain tight amid restrained output by major producers. Gold price edged up too, trading at $1,819.2. Major cryptocurrencies reversed losses and traded higher. Price of Dogecoin soared on word Tesla customers can use the Shiba Inu-faced coin to buy some of the carmaker’s merchandise.

image_2022_01_17T06_44_52_352Z

Figure 1 (Source: IS Prime) SPT.CO.US Daily : Reluctance from OPEC to increase the pace of supply alongside increasing demand recovery has crude oil peak its highest since November 2021.

Headliner to Review

  • The U.S. retail sales on Friday fell by 1.9%, which disappointed expectations as worries over the Omicron variant and rising inflation hit spending.
  • U.S. January prelim UoM consumer sentiment index came out to be 68.8 vs 70 expected.

Headliner to Watch

  • The Bank of Japan (BoJ) will release its first policy decision of the year on Tuesday. There is a near zero chance of a rate hike, but policymakers may option to change the language around inflation risks, expected to highlight the possibility that inflation could outpace the bank’s targets.

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Authors:
Antony Tan
Kerry Man