Market Commentary – March 11, 2022

Kevin Jock

11th March 2022

Global stocks unable to follow up with Wednesday’s big rally and instead, it sank on Thursday. All the major U.S indices are slightly down at yesterday’s market close, with the Nasdaq dropped by nearly 1%. The fresh inflation data released in the U.S. confirmed analysts believe that the Fed will soon tighten its monetary policy despite the conflicts between Russia and Ukraine.

In Europe, local stock markets fell on a broad basis as both the CAC 40 and DAX indices slid nearly 3%. The ECB has announced to end asset purchases in the third quarter, which in turn surprised investors as not only it is earlier than expected, but also given the uncertainty of the ongoing geo-political shock. As such, ECB obviously believes that the consequence of inflationary pressure outweighs the geo-political conflicts. Meanwhile, third round of talks in the Turkish city of Antalya turns out to be unsuccessful in general, between the foreign ministers of both Russia and Ukraine. Both sides made clear that no progress had been made as the demand proposed from each other seems to be too stringent to satisfy.

Elsewhere in Asia, all the markets dipped following yesterday’s U.S. and European markets’ decline, ranging from the Australian indices to the mainland Chinese stock markets. HK’s Hang Seng Index took another hit as it has dropped over 2% since today’s opening, it is now on the verge of the 20,000 points psychological level, dragged down by the tech heavyweights on the back of JD’s lackluster growth following its Q4 reports.

Oil prices continue to slide on Friday morning in Asia, looking to set for their biggest weekly decline since November 2021, with the WTI crude price currently trades at $106.32 per barrel. Gold prices continue to remain volatile as it touched $1,970.82 per ounce during yesterday’s low. Price of Euro bounced back a bit against the dollar at around $1.1000, with the pair’s latest moves linked to the market’s confusion over the key risk catalysts, as well as USD pullback.

image_2022_03_11T06_14_43_409Z

Figure 1 (Source: IS Prime) IDX.JP.255 daily : The Nikkei now 18% from its peak reached back in September 2021 as annual GDP growth slows to a marginal 0.7% and outlook bleak.

 Headliner to Review

  • The ECB delivered a more hawkish tone to the market during yesterday’s meeting, whereby the bank will push ahead with their plan to discontinue its €1.85 trillion Pandemic Emergency Purchase Programme at the end of March to combat steep rising inflationary pressures. However, they also clarified that the policy normalisation will be carried out step-by-step, instead of accelerating the normalisation procedures.
  • U.S. CPI rose 7.9% in February, with the core CPI (excluding food and energy prices) hiked by 6.4% which is the most since 1982. Gas prices gained 6.6% and accounted for almost one-third of the February rise, which is one of the biggest contributors to the overall monthly CPI increase.

Headliner to Watch

  • The Chinese retail sales statistics are due to release next week, previously the figure increase by 1.7%.

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Authors:
Antony Tan
Kerry Man