Market Commentary – March 17, 2022

Kevin Jock

17th March 2022

The U.S. equity markets rallied significantly on Wednesday after the Fed announced the increase of interest rates, which is the first time since 2018. All of the three major stock indices jumped especially the Nasdaq, in which it hiked 3.77%. Chinese companies listed in the U.S. are the stars of yesterday, their share prices rocketed including Alibaba, which it advanced 36.7% after the Chinese top officials signaled steps to support the local financial markets. Meanwhile, the legendary entrepreneur Howard Schultz returns to Starbucks as interim CEO.

Across the Atlantic, European stock indices closed at over two-week highs yesterday, both the France’s CAC 40 and Germany’s DAX ascended by 3.68% and 3.76% respectively. The uplift in stock markets was mainly driven by the significant progresses made between Ukraine and Russia, where both sides proposed deals on ceasefire and Russian withdrawal if Kyiv declares neutrality and accepts limits on its armed forces. Although such deals haven’t been fully confirmed yet, but progresses is being made which will hopefully yield an actual peaceful agreement.

All of the major Asian markets advanced on today’s trading sessions. Japan’s Nikkei 225 closed up 3.46% on the back of 7.4-magnitude of earthquake on last night, which hit the coast of Japan’s eastern Fukushima nuclear plant and resulted four people dead with over 100 injuries. Both the Mainland Chinese and HK’s markets continued their advance on top of yesterday’s huge rally, with the CSI 300 and Hang Seng Indices rose 1.96% and 7.04% respectively, after the aforementioned support conveyed by Beijing.

Oil price hiked today after the continuous decline in the recent days, when the International Energy Agency (IEA) warned on the loss of Russian crude supplies which could potentially outstrip the drop in demand. Brent crude rose above $100 to currently trade at $102.09 per barrel. Bullion rebounded as well, to settle at $1926.19 at the end of yesterday’s trading session. Bitcoin price once again increased above the level of $40K to trade at $41.2K.

EURUSD chart (2022.3.17)

Figure 1 (Source: IS Prime) EUR/USD daily: The euro was up on Thursday due to the progress of talks between Ukraine and Russia, to the weekly high of $1.1067 after its significant drop during the past few weeks.

 Headliner to Review

  • U.S. retail sales rose less than expected last month, up by 0.3% (market forecast of 0.4%). This is largely due to higher prices offsetting increased demand as the economy is recovering from the pandemic. Largest gain in terms of sales comes from gas stations, rose 5.3% last month due to the surge of fuel prices.
  • The U.S. Fed has increased interest rates from 0.25% to 0.5% during yesterday’s meeting, which is widely anticipated by the market. They also signalled a further six rate hikes at all of the six remaining policy meetings this year.

Headliner to Watch

  • Bank of Japan (BoJ) will announce their rate decision on Friday, it is expected that they will continue to keep monetary policy ultra-loose and remain dovish.
  • Retail sales figure in Canada is forecasted to increase by 2.4%, from a decline of 1.8% previously.

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Authors:
Antony Tan
Kerry Man