Market Commentary – June 02, 2022

Kevin Jock

2nd June 2022

Major U.S. stock indices fell on Wednesday as investors still believes that the central banks would act aggressively to deter inflation, after the release of the manufacturing PMI index which is stronger than the forecasted figure. The Dow, Nasdaq and S&P 500 indices all declined 0.54%, 0.72% and 0.75% respectively.

European assets followed a similar pattern, with the broad benchmark STOXX 50 dropped 0.78% yesterday, while London’s FTSE 100 index closed down almost 1%. All eyes will be on the ECB meeting next week to discuss how quickly the central bank should raise rates to combat inflation. On the other hand, a number of Ukrainian troops had retreated westwards from the besieged city of Sievierodonetsk, where the city is now 70% controlled by Russian forces.

Asian markets did not fare well either on Thursday morning, with all the primary local stock indices in red territories, including both ASX 200 and Nikkei 225 indices, as it dipped 0.9% and 0.25% respectively. In Macau, their economies are under severe pressure as plunging casino revenues hit the world’s largest gambling hub, forcing hundreds of businesses to close down and pushing unemployment rate to the high of 2009.

In terms of commodities, WTI crude price dropped this morning to currently trade at $113.94 per barrel. Saudi Arabia is ready to pump more oil if Russian output decreases under the weight of sanctions. Bullion price still fluctuating range bound, while price of bitcoin dropped significantly to below $30K, currently at $29.7K.

image_2022_06_02T03_18_33_261Z

Figure 1 (Source: IS Prime) USD/TRY daily : With inflation expected to reach 76.5% in May alongside central bank reluctance in raising interest rates, the Turkish lira sours against the greenback.

Headliner to Review

  • The Australian GDP growth slows in the first quarter of 2022, as the newly released figure came out to be 0.8% compared to 3.6% from the fourth quarter of 2021.
  • Bank of Canada hiked interest rates by 50bps to 1.5% as expected by the market consensus. They also acknowledged that they are prepared to act more forcefully.

Headliner to Watch

  • The U.S. NFP figure is expected to print 325K jobs on Friday, with the unemployment rate looking to drop marginally by 0.1% to 3.5% in May.
  • U.S. ISM Services PMI is forecasted to register at 56.5, down from 57.1 in the previous month.

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Authors:
Antony Tan
Kerry Man