Market Commentary – March 01, 2022

Kevin Jock

1st March 2022

The performance of the U.S. equities on Monday turns out to be mixed, with both the S&P 500 and the Dow dipped marginally by 0.24% and 0.49% respectively, while the Nasdaq ended in green territory, up by 0.41%. Traders are simply reducing their positions during such turmoil period and assessing the likely outcome that could potentially arise from the current geopolitical situation.

Across the Atlantic, major European stock indices are all down as of yesterday, with the EURO STOXX 50 index closed down by 1.17%. The ongoing war continue to intensify across the Eastern European regions, with the Russian armies launched fierce rocket attack on Ukrainian city of Kharkiv, killing dozens of innocent local citizens. Although Russia has unleashed its military operations five days ago, but they have failed to capture any major cities. There is certainly no doubt that the local civilians are the biggest victim as many of the current residents fled the country to seek for safety elsewhere.

In Asia, both the Australia’s ASX 200 and Japan’s Nikkei 225 indices recovered from yesterday’s losses, currently up by 0.65% and 1.34% respectively after the mid-day break. The Chinese stocks also advanced slightly today, with some expansion of factory activities in February which indicates some resilience of the world’s second largest economy. In Hong Kong, the local government is still formulating plans to enforce a partial lockdown of the city to ensure a mandatory COVID-19 testing, which will begin after 17th March.

Price of oil continue to climb on Tuesday, due to concerns over potential supply disruption as the WTI crude price rose to nearly $98 per barrel. Gold price remained almost flat as of today, trading at around $1,905.9 per ounce. The value of the Russian ruble collapsed after it has lost more than a quarter against the dollar, with the Biden’s administration announced new restrictions on dealing with the Russian central bank. Meanwhile, Bank of Russia lifted interest rates from 9% to 20% to stabilize their local currencies.

EURRUB chart (2022.3.1)

Figure 1 (Source: IS Prime) EUR/RUB daily: Such currency pair broke through the 100 level on last week as the Russian central bank has started interventions in the foreign exchange market. But it is short-lived since it quickly retraced back to 94.

 

Headliner to Review

  • Retail sales figure in Japan continue to contract in January, as it dipped 1.9% compared with economists’ forecast of a 1.2% fall. Such weakness in sales shows consumers is less willing to spend as the whole country has been affected by the biggest virus wave.
  • Q4 2021 GDP figure from Switzerland came out to grow by 0.3%, in line with expectations but much lower compared to the previous quarter of 1.9% expansion. The domestic economy was negatively impacted by the pandemic due to the introduction of additional restrictions.

Headliner to Watch

  • The latest quarterly GDP figure from Australia is due to release on Wednesday, expect to grow by 3%. However, recorded weaker than forecast business investment in the last quarter of 2021 might subdue the GDP figure a bit.
  • U.S. ADP non-farm employment statistics is forecasted to increase by 378K, compared to a decrease of 301K from the previous month.

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Authors:
Antony Tan
Kerry Man