Market Commentary – January 31, 2022

Kevin Jock

31st January 2022

U.S. stocks advanced significantly at the end of a volatile week on Friday, with the blue-chip index S&P 500 rose 2.4% in the late afternoon trading session, while the Nasdaq index climbed more than 3%. Such rallies were due to a strong, upbeat quarterly earnings report from Apple, where its share prices closed up by nearly 7% as the semiconductor supply chain glitches were causing less hit than analysts’ expectations.

Across the Atlantic, all major European stock indices fell broadly on Friday, with the EURO STOXX 50 dropped 1.15%, ending in the red territories for the third consecutive week already. Despite the downbeat markets, Russia reiterated on Friday that they do not want to have war with Ukraine as the Kremlin mentioned that Putin is ready to keep communicate with the U.S. and NATO.

In Asia, Australia shares dropped on Monday morning Asian session, dragged by mining stocks with the ASX 200 index fell by almost 0.6%. HK’s Hang Seng index climbed marginally by 0.5%, though it only opens for half day today due to the Chinese New Year holiday, while mainland Chinese stocks will remain closed for the whole week.

Oil price has continued to climb on Monday morning, with Brent crude currently trading above $90 a barrel at around $90.45. Gold price has declined quite dramatically on last week, down by over 2% for the first month of year 2022 and it is currently settling at $1,787.6 per ounce. Bitcoin price has been leaping around the $37K level as it retraced from today’s high at $38.2K.

image_2022_01_31T03_26_19_216Z

Figure 1 (Source: IS Prime) USD/CHF Daily : The pair appreciates to a two month high as rate hikes by the Fed undermine demand for the safe haven Swiss franc.

Headliner to Review

  • The U.S. core personal consumption expenditures price index (PCE) rose 4.9% from a year ago in December, which is the fastest increase since Sep 1983, while the monthly increase of 0.5% matches with the expected figures.
  • U.S. 2022 consumer sentiment index declined to 67.2 in January when compared to 68.8 from the previous month.

Headliner to Watch

  • The Reserve Bank of Australia (RBA) will announce its cash rate decision on Tuesday, and it is expected that they will maintain the rate at its current level of 0.1%. However, consensus also believe that the RBA will announce the end of its bond buying program during the incoming policy decision meeting.
  • Manufacturing PMI figures are due to release across a series of G20 nations, including Italy, Germany, France, Eurozone, U.K., and the U.S.

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Authors:
Antony Tan
Kerry Man