Market Commentary – March 23, 2022

Kevin Jock

23rd March 2022

U.S. stocks bounced back on Tuesday with both the S&P 500 and the Nasdaq indices rose by more than 1% as investors look ahead to tighter monetary policy from the Fed. Tech stocks are the winners such as Tesla, in which it hiked 7.9% which pushes its market capitalization back above $1tn after the company opened a new plant in Germany. Alibaba announced to increase share buyback plan to $25bn which drove the stock up by 11% at yesterday’s market close. Such positive news boosted market confidence which drove up the share prices of all the other major Chinese tech firms listed on the U.S. Stock Exchanges.

Across the Atlantic, European equities rose on Tuesday with both the CAC 40 and DAX indices ascended over 1%, driven by shares from the banking sector as aggressive rate hike prospect favor the banks. Markets forecasted that the probability of a 50 basis point rate hike from the Fed has reached 60%. Meanwhile, U.S. President Joe Biden will meet up with the NATO partners as well as attending the G7 summits to discuss further sanctions against Russia, although the details of the sanctions are not fully disclosed yet.

In Asia, Japan’s Nikkei 225 index is up again on today by 2.7% shortly after the mid-day break. The blue-chip index has rallied continuously over the past six days to trade above 28,000 points. Chinese stocks also rose slightly as the CSI 300 index hiked 0.35% during the beginning of the afternoon trading session. On the other hand, the rescue teams did not find any survivors from the air disaster of China Eastern Airline.

Price of WTI crude rose to $112 per barrel on Wednesday due to a drop of U.S. crude inventories which again cause concerns on constrained supplies. Gold prices remain nearly flat today, with its volatility calmed down significantly in this week, trading at around $1,921.25 per ounce. Cable has made a come back in this week after the Bank of England hiked interest rates, it settled yesterday at $1.32613.

image_2022_03_23T06_20_41_584Z

Figure 1 (Source: IS Prime) IDX.HK.100 daily : As authorities in China signal looser monetary and expansionary fiscal policies alongside a pull-back in regulatory crackdown, the Hang Seng 50 propelled itself higher upon the news. Now above the 22,000 handle.

 Headliner to Review

  • The newly released Westpac Consumer Sentiment Index in New Zealand dropped to the lowest level since the 2008 global financial crisis, came out to be 92.1 compared to 99.1 from the previous quarter. An index number below 100 indicates that pessimists outnumber optimists, and such downbeat mood is driven by rising interest rates and living costs.
  • The Richmond Manufacturing Index in the U.S. has improved significantly to 13 in March, from the previous figure of 1 in February, with increases in all three of the component indexes, including shipments, number of employees and volume of new orders

Headliner to Watch

  • The Swiss National Bank will deliver its monetary policy assessment and it is expected to keep the policy rate unchanged at -0.75%.
  • Both the Flash Manufacturing and Services PMI figures are due to release on Thursday, across a number of OECD countries including Australia, Japan, France, Germany, UK, and the U.S.

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Authors:
Antony Tan
Kerry Man