Market Commentary – January 26, 2022

Kevin Jock

26th January 2022

Wall Street stocks closed lower on Tuesday, with all the major indices in red territories. Investors are simply waiting for the signals of the upcoming Fed meeting and it is anticipated an increase of interest rates as soon as March. The broader S&P 500 index fell by 1.22%, with the tech, utilities and communication sectors encountered significant hits as equities are suffering due to potential slower growth.

In Europe, the regional shares have recovered some losses from the previously sell-off on Monday, with the EURO STOXX 50 index gained 0.6% at the market close. Rate sensitive sector including banking stocks were the top performers, up by 2.9% apart from Credit Suisse, which dropped 0.94% due to a potential Q4 net loss from legal costs.

In Japan, the benchmark index Nikkei 225 dropped to a 13-month low on Wednesday morning, dragged down by its tech stocks as the U.S. markets closed lower overnight, with the index fell by 0.4% at the mid-day break. Meanwhile, China’s blue-chip equities lost some ground as well, due to the launch of the seventh round of centralized pharmaceutical procurement, which is intended to drive down medical costs for patients and such action weighed down the local healthcare firms.

Price of oil fell slightly on Wednesday as investors begin to take profits before the Fed announcement. Gold price was also down during the Asian morning period, after hitting a two-month high, due to geopolitical tensions between Ukraine and Russia. Bitcoin price has recovered a bit from the recent low of below $33K, currently trading at around $37.5K.

image_2022_01_26T06_45_50_515Z

Figure 1 (Source: IS Prime) USDCNH Daily : Chinese yuan edges towards a 4 year as continuing strong corporate demand before the New Year holiday has pushed the currency higher.

Headliner to Review

  • The U.S. Consumer Confidence Index declined to 113.8, down from 115.2 in December.

Headliner to Watch

  • The U.S. Fed will release its FOMC Statement by tomorrow, with markets believe they will hike rates by 25bp in March and it is also expected that they will deliver the statement with a more cautious manner rather than being over hawkish.
  • U.S. quarter 4 2021 GDP data is expected to approach 5%, much higher than the previous quarter of an increase by 2.3% only.

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Authors:
Antony Tan
Kerry Man