Market Commentary – January 25, 2022

Kevin Jock

25th January 2022

Reprieve for Wall Street on Monday after a late-session rally saw benchmarks managing to settle in positive territory despite declining as much as 4.7% intra-day on the likes of Nasdaq. Subsequently, breaking 5-days of consecutive declines as sentiment was enveloped from the Federal Reserve’s endeavour in fighting inflation to rising geopolitical tensions. An 80-minute call between US President Biden and European leaders portrayed a unified front in hopes to deter a Russian invasion into Ukraine, though stopped short in supplying weaponry to the country.

Meanwhile, European indices underperformed falling short in echoing their US counterparts. STOXX50 closed lower 1.3%, CAC40 down 1.1% and DAX40 crawled back to post a loss of 1.1% whilst slumping as much 3.9%. On the English-front, Boris Johnson’s premiership was further rocked by allegations that the Prime Minister organised a birthday party whilst social restrictions were implemented.

Global efforts in stomping out COVID-19 hits a snag as cases flare up unevenly. Though WHO remarked Europe’s “new phase” amid a more stable pandemic. US seven-day average days hits highest in 11 months whilst China and Hong Kong persist with their zero covid policy with the latter suggesting private company employees to work-from-home starting Tuesday. Amid both an Omicron and Delta outbreak, the Hang Seng crumbled 2.2% yesterday with today’s open attempting to regain lost ground, up 0.1% thus far. The S&P200 gapped higher on open only to lose 1.7% intra-day. The Nikkei followed suit, down 1%.

Crude holds strong above $84 as stockpiles continue to drop with the American Petroleum Institute set to release figures illustrating another monthly decline. A Russian invasion into Ukraine would further exacerbate supply-chain concern. Ahead of FOMC on Wednesday, gold inches up to $1,842, the US dollar positions higher across the board and bitcoin finds a base at the $35,000 level as the embattled darling of the digital currency world sinks 50% from its all-time high. The sell-off coincided with overall risk-off sentiment in preparation for central banks reigning in on quantitative easing.

NASDAQ-Jan-25-2022-02-45-18-34-AM

Figure 1 (Source: IS Prime) IDX.US.100 Daily : Rough start to the year for tech, down as much as 17% from all-time highs. Though there are signs of discount-buyers following yesterday’s reversal day.

Headliner to Review

  • Plethora of manufacturing and services PMI out of the US, UK and EU revealed overall, weaker data with demand softening alongside on-going supply chain roadblocks
    • US fell from 57.7 and 57.6 to 55.0 and 50.9 respectively.
    • UK fell from 57.9 and 53.6 to 56.9 and 53.3 respectively.
    • EU manufacturing grew from 58 to 59 whilst services declined from 53.1 to 51.2.
  • Aussie CPI data came out better than expected at 1.3% with 1% anticipated. The government’s reluctance in re-implementing nation-wide lockdowns has ensure the economy keep’s trucking along though Omicron cases skyrocket.

Headliner to Watch

  • Germany expected to release Ifo business climate data with figures stabilising around the 94.6 level.
  • Core CPI data out of Japan, expected at 0.7%, a slight decline from previous figure of 0.8%.

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Authors:
Antony Tan
Kerry Man