Market Commentary – January 6, 2022

Kevin Jock

6th January 2022

Investors dumped shares in many of the tech corporations and purchased more stocks that are tightly linked to the economic recovery, with the Nasdaq index closed 3.3% lower on Wednesday, its worst day since February 2021. By contrast, shares of carmakers as well as banks, were higher with the KBW Bank index up by almost 5% this year, closing in on a record high.

In Europe, automobile stocks drove European equities to new highs on Wednesday, even under the condition when the new year rally seems to be out of gas due to concerns over COVID-19 and slowing growth. The continent-wide STOXX 50 index rose 0.56% to 4,392.15 points, up by three consecutive days already.

Australian shares dropped on Thursday, as tech stocks tracked overnight losses on Wall Street, with the benchmark ASX 200 index dropped by 2.74% at the market close. HK stocks continued to slide, the Hang Seng index descended narrowly by 0.36% before the mid-day close, dragged by the Internet heavyweights as well.

Price of Brent crude shot up to $81.72 per barrel then retracted to eventually settle at $80.31 on yesterday. Bitcoin fell below $43K, testing multi-month lows after Fed minutes showed it leaning toward more aggressive policy action, which sapped investor appetite for riskier assets.

image_2022_01_06T06_41_22_239Z

Figure 1 (Source: IS Prime) GBPJPY Daily : The currency has rallied to fresh multi-month highs in recent trade above the 157.70 level. It’s highest point since late October. Sterling may have gained such upward momentum as the UK PM reiterated that he was keen to avoid lockdowns.

Headliner to Review

  • U.S. private sector employment increased by 807K jobs from November to December according to the December ADP National Employment Report. Such massive job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth.
  • U.S. services providers registered another steep expansion in business activity at the end of 2021, according to the latest PMI data, in which the final IHS Markit US Services PMI Business Activity Index registered 57.6 in December.

Headliner to Watch

  • The U.S. NFP figures is due to release on Friday. Analysts are forecasting an increase of 426K jobs in December and for the unemployment rate to tick lower to 4.1%.

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Authors:
Antony Tan
Kerry Man