Market Commentary – January 20, 2022

Kevin Jock

20th January 2022

In U.S., the Nasdaq index closed in correction territory for the first time since last March after a volatile trading day that saw repeated swings back and forth across the markets, with the index ended the day 1.1% lower. Such decline brought the Nasdaq more than 10% below the all-time high set in November, meeting the common definition of a market correction. The S&P 500 also swung between gains and losses before settling down 1%, as the benchmark index has fallen more than 5% from the high it hit in early January.

European shares ended higher on Wednesday as positive earnings from the luxury goods sector and strong commodity prices helped investors momentarily look past concerns over rising interest rates. Mining stocks were the best performers for the day, up 2.7% as iron ore prices surged on signs of more stimulus in major importer China. The major indices including FTSE 100, CAC 40 and DAX all rose marginally by 0.35%, 0.55% and 0.24% respectively.

Elsewhere in Asia, Australian shares fell for a third straight session on Thursday, hurt by financials and tech sectors following a weak finish overnight on Wall Street, while resource-related stocks jumped on robust commodity prices. Meanwhile, China cut its mortgage reference rate for the first time in nearly two years and have signaled that they will take more easing steps this year to shore up slowing growth. Their blue-chip CSI 300 index rose 1%, while HK’s Hang Seng added more than 2% before the mid-day break.

Oil prices slipped back on Thursday after hitting their highest level since 2014 in the previous session on the back of strong demand and short-term supply disruptions. Gold climbed about 1.7% yesterday, while silver surged more than 3%, with both precious metals reached their highest closing levels since November, as expectations for higher interest rates continue to get priced into the market. Bitcoin price trading in a narrow range to settle at $41.7K.


Figure 1 (Source: IS Prime) XAU/USD Daily : Despite inflation concerns, gold ranges between 1,700 – 1,900 de-linking the precious metals association as an inflationary hedge.

Headliner to Review

  • UK CPI rose by 5.4% in the 12 months to December 2021, up from 5.1% in November. This is the highest CPI 12-month inflation rate in the National Statistic data series, which began in January 1997.
  • Bank of England (BoE) Governor Andrew Bailey signaled the UK’s inflation outlook is likely to worsen when policy makers complete their forecasts in two weeks, noting a darkening picture on both wages and natural gas prices.

Headliner to Watch

  • The Canadian monthly retail sales figure is due to announce tomorrow, expect to hike by 1.2%.
  • U.S. crude oil inventory is forecasted to declined further by 2.1M barrels.

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Antony Tan
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