Market Commentary – March 10, 2022

Kevin Jock

10th March 2022

U.S equities bounced back from the recent losing streak on Wednesday, with all the major indices hiked by more than 2%. The blue-chip S&P 500 had its largest one-day gain since June 2020, up by 2.6% at yesterday’s market close, while the Nasdaq ascended almost 3.6%. The investors risk appetite has regained as the escalation of energy prices have eased, as well as the perspective that the EU leaders would take action to curb the economic impact of the conflict.

Across the Atlantic, the European stock indices rebounded sharply after three days of sell-off, with both the EURO STOXX 50 and DAX indices rose by a staggering amount of 7.44% and 7.92% respectively. Banks, automakers and travel and leisure sub-sectors led the gains with over 7% each. Meanwhile, Ukraine has accused Russian forces of breaching a ceasefire in the city of Mariupol, in which a local hospital has been destroyed with the civilian death numbers mounting. Ukraine president Zelensky insisted Western allies to send more support including the imposition of a no-fly zone but was rejected as the NATO do not want to have a direct confrontation with Russia.

In Asia, all the major markets have followed Wall Street’s rebound overnight. The Japanese Nikkei 225 index jumped 3.84% before the mid-day break. HK’s Hang Seng Index opened high in the morning but dipped towards the mid-day to currently trade at around 20,854 points, still up by 1%. Meanwhile in mainland China, local COVID cases re-emerged in Shanghai, whereby tens of thousands of people were tested. Some public venues were also shut including concerts and exhibitions. From the latest statistics, total number of cases are 80 with majority of them are non-symptom cases.

In terms of the commodities, price of oil has eased off from a 14-year high as of Wednesday, dropped sharply to settle at $113.58 per barrel as UAE said they would increase oil production. Likewise, gold price dipped as well on the improvement of the risk sentiment, as well as the indication that Ukraine is ready for diplomatic solution with Russia. Price of bitcoin traded higher since yesterday to settle above $41K, after U.S. President Biden issued an executive order for the reviewing of the digital assets as well as the possibilities of creating the digital dollar.

image_2022_03_10T05_50_26_533Z (1)

Figure 1 (Source: IS Prime) USD/TRY daily: Despite Turkish President personally intervening late 2021 with high inflation still afoot, the lira resumes it’s depreciation.

 Headliner to Review

  • The Chinese PPI increased 8.8% on year, eased from 9.1% growth in January but still above forecasted figure of 8.5%. However, due to the surge of commodity prices, we expect the year-over-year PPI figure to stay elevated in the near term.
  • The U.S. labour market remains tight, with the newly released job openings totalled 11.3 million in January, more than the estimated figure of 10.96 million.

Headliner to Watch

  • Unemployment rate in Canada is due to release on Friday, expected to drop to 6.2% vs. 6.5% from the previous month.
  • The Preliminary UoM Consumer Sentiment index is forecasted to drop to 61.4, as the rising oil prices could potentially reduce household’s spending power.

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Authors:
Antony Tan
Kerry Man