Market Commentary – March 28, 2022

Kevin Jock

28th March 2022

The U.S. stock markets remain quite calm on Friday, both the Dow and the S&P 500 indices advanced gently by 0.44% and 0.51% respectively, while the tech-heavy Nasdaq indices dipped marginally by 0.16%. Although the Nasdaq declined, but it still recorded its second consecutive week of gains, up 2% on weekly basis. The markets now believe a faster pace of rate increase after the New York Fed chief delivered hawkish comments on Friday, which align with the recent comments made by Jay Powell. Should such scenery occur and are outside of investors’ expectations, then the equities could remain under pressure particularly the tech stocks.

European shares ended marginally higher on Friday with the exception of CAC 40 index, as it remains almost unchanged. The broad benchmark EURO STOXX 50 index was up 0.11% on the day, but it was down slightly on a weekly basis. The EU would import at least 15bn cubic meters of liquefied natural gas from the U.S. before the end of this year, in order to replace imported energy from Russia. Meanwhile in Eastern Europe, Russia seems to refocus its tactics of the military offensive by scaling back attacks in some parts of the region to concentrate on its new goal of fully liberating the Donbas region.

In terms of the Asian markets, majority of them dropped on Monday shortly after the opening of the market, due to the sudden occurrence of the two-stage lockdown imposed in Shanghai, which could possibly hit global activity as the city is one of China’s primary centers for finance and goods trade. Japan’s Nikkei 225 index dipped 0.8%, while China’s blue-chip index CSI 300 and HK’s Hang Seng index fell 1.7% and 0.6% respectively.

Price of Brent crude dipped almost $4 on Monday due to concerns over slower fuel demand in China after the local government sealed off half of Shanghai for COVID-19 testing. Bullion dropped slightly to currently trade at $1,948 per ounce. In contrast, bitcoin price shot past $46.5K today, which has reached a three-month high after climbing six consecutive days.

image_2022_03_28T03_22_59_989Z

Figure 1 (Source: IS Prime) GBP/USD daily: Wednesday budget announcement saw the British pound resume it’s long-term decline back below its’ 1.32 handle.

 Headliner to Review

  • UK retail sales figure from last month came out to be unexpectedly poor as it dropped 0.3% month-to-month, compared to the median forecast of a rise of 0.6%. The recent surge of cost of living has gradually eaten local household’s spending power and the government’s Spring budget offered little help.
  • UoM Consumer Sentiment Index in U.S. fell to 59.4 from 59.7 earlier in the month, which is a fresh record low as inflationary pressure mounted and begin to negatively impact household incomes.

Headliner to Watch

  • Unemployment rate in Japan is due to release tomorrow, expected to remain the same as of the previous month at 2.8%.
  • The latest JOLTS Job Openings figure in U.S. is forecast to register 11M vacancies.

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Authors:
Antony Tan
Kerry Man