Market Commentary – January 28, 2022

Kevin Jock

28th January 2022

Wall Street stocks all closed lower on Thursday, with the S&P 500 index finished the day 0.54% lower and the Nasdaq dropped 1.4%. Both indices actually rose in the morning but reversed to finish in red territory after the hawkish announcement made by the Fed. Share price of Tesla plummet by 11.5%, after they have delayed the releasing of new vehicles until next year due to supply chain disruptions.

European equities finished higher on Thursday after the Fed meeting, with the defensive sectors leading the gains as the broad benchmark EURO STOXX index hiked by 0.5%. Deutsche Bank ascended 4.4% as it made the largest level of profit since 2011, completely ignored market expectations for a loss in Q4.

Elsewhere in Asia, the Australian benchmark ASX 200 closed 2.19% higher, propelled by the local mining stocks which added as much as 2% on Friday, due to the escalating iron ore prices. China stocks rose slightly on Friday after local newspapers and asset managers tried to calm investors, with the top fund management companies purchase their own funds in bulk quantity.

Brent crude settled at $89.844 yesterday. Gold price dipped below $1,800 per ounce and had its sharpest weekly decline since November 2021. The U.S. dollar surged significantly on Thursday, to the highest level in nearly 18 months when traders reacted to Fed chair’s statements, with the dollar index surpassed 97 level.

image_2022_01_28T06_21_20_501Z

Figure 1 (Source: IS Prime) NZDUSD Daily : Ever improving macroeconomic data propels demand for US dollar as the Kiwi dollar drops over 1% to sit at $0.657, the lowest point since Oct 2020.

Headliner to Review

  • Fed chair Jay Powell delivered the most hawkish messages to the markets during yesterday’s press conference, since the era of the pandemic. He made clear that the first-rate rise will be implemented at the next meeting in March, and also declined to ruled out the possibility of raising interest rate at every policy meeting this year.
  • U.S. annualized GDP growth in 4Q 2021 has reached 6.9%, much higher than the consensus of 5.3%. Such contribution is primarily led by inventory rebuilding in the auto sector, which contributed 4.9% to the total.

Headliner to Watch

  • Both the manufacturing and non-manufacturing PMI is due to release in China, expected to be 50 and 50.6 points respectively.

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Authors:
Antony Tan
Kerry Man