Market Commentary – March 02, 2022

Kevin Jock

2nd March 2022

U.S. stocks broadly fell on Tuesday, while government bonds rallied. All three major U.S. stock indices dropped more than 1.5% as traders worried about the global economic implications of the conflicts in Eastern Europe. Investors continued to put money into haven assets and away from equity market risk. Financial stocks are the big laggers with share prices of both American Express and JP Morgan slid by 8.5% and 3.8% respectively.

In Europe, local stocks encountered big sell-off with both CAC 40 and DAX indices closed down by almost 4% as of yesterday. Shares of utilities, consumer cyclicals and financials are the biggest losers. Traders now believe that the ECB might continue to maintain its supportive monetary policies due to the economic risks caused by the war. In terms of the news from the front line, Russia prepares for renewed push on Ukrainian cities as they have intensified bombardments with continuous missile strikes on critical infrastructure. The Western allies forbid Russian planes entering their airspace while the big corporations gradually pulling out their businesses from Russia, including Apple and Microsoft. Further to the west, London faced severe tube strikes on Tuesday morning, with nearly 10,000 workers from the Rail, Maritime and Transport (RMT) union unsatisfied over job losses and pensions.

Meanwhile in Asia, majority of the local benchmark indices dropped except for Australia’s ASX 200, which closed up marginally by 0.28% on Wednesday. Japan’s Nikkei 225 index fell 1.68% and likewise, China’s blue-chip CSI 300 index dipped 0.89%.

Brent crude settled at its highest price since 2014, currently trading above $110 per barrel. Since yesterday, the International Energy Agency said that member countries are ready to release up to 60mn barrels of crude to deter surging oil prices. Price of bitcoin seems to reverse its downward trend and started to rally, settling at nearly $44K as the conflict in Eastern Europe led to demand for alternative currencies.

HK50 chart (2022.3.2)

Figure 1 (Source: IS Prime) Hang Seng Index daily: HK’s blue chip index has been performing poorly in the recent weeks, trading at around 22,350 points, with both the Ukrainian war and the local COVID-19 outbreak imposing a downward pressure on the index.

 Headliner to Review

  • The Reserve Bank of Australia (RBA) has maintained its cash rate unchanged at 0.10, in line with market expectations. The Board of RBA will only increase cash rate when inflation is sustainably within the 2 to 3% target range.
  • U.S. ISM Manufacturing PMI came out to be 58.6%, up 1% from January. It is the 21st consecutive month of expansion since spring of 2020. The figures suggested that there are signs of relief and recovery from the omicron variant back in February.

Headliner to Watch

  • Newest services PMI figures are due to announce on Thursday, across the major European nations including Spain, Italy, France, Germany, and UK.
  • U.S. ISM Services PMI is expected to continue to improve, forecasted figure is 61.2 compared to 59.9 from last month.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Authors:
Antony Tan
Kerry Man