Market Commentary – January 24, 2022

Kevin Jock

24th January 2022

Global equities hit their biggest declines in more than a year as losses in price of Netflix stock (down by 21.79%) highlighted a sell-off in tech stocks that spilled into other sectors. Share declines are extreme in the U.S., with the Nasdaq index fell 7.6% last week, its biggest slide since the pandemic hit U.S. back in Mar 2020. S&P 500 dropped 5.7% during past week as well.

European stocks slumped on Friday to mark a third week of losses with the broad benchmark EURO STOXX 50 index dropped 1.63%, while Germany’s DAX slid nearly 2%. Mining stocks were the day’s worst performers as Rio Tinto fell 2.2%, which is the biggest drag on the sector.

Australian shares slid on Monday, caused by miners and tech stocks, with the ASX 200 index down 0.32% during the Asian morning session. Meanwhile, HK stocks suffered too, with the Hang Seng index down by 1.2%, mainly dragged by its tech stocks as it mirrors the U.S. tech share sell-off from last week. The Hang Seng TECH Index currently dropped by nearly 3% before the mid-day close.

Oil prices increased on Monday, due to rising tensions in Eastern Europe, while OPEC has continued to struggle to raise output. Gold price inched higher with increased threats of Russian military action, currently trading at $1,838.20. Bitcoin dropped to a six-month low on Saturday, extending a steep fall recorded in the previous session, to as low as $35.1K.

image_2022_01_24T06_30_07_667Z

Figure 1 (Source: IS Prime) IDX.AU.200 Daily : As cases of Omicron spirals out of control alongside monetary tightening expected throughout 2022, the Australian benchmark hits its lowest level since May 2021.

Headliner to Review

  • U.S. commercial crude oil inventories increased by 0.5M barrels from the previous week, compared to the forecasted figures of a decrease of 2.1M barrels.
  • UK retail sales figure fell by 3.7% over the month, well below the -0.6% reading forecast, marking a stark drop from the prior month’s 1% gain.

Headliner to Watch

  • The Australian Bureau of Statistics will release the CPI for December quarter on Tuesday. Economists’ forecasts point to a 1% increase in the quarterly CPI, largely reflecting higher petrol prices and the increased cost of new housing, which is likely to fuel speculation of an interest rate rise by the RBA this year.
  • The German ifo Business Climate index is expected to be 94.1, down from prior month’s figure of 94.7.

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Authors:
Antony Tan
Kerry Man