Market Commentary – March 31, 2022

Kevin Jock

31st March 2022

The recent winning streaks of Wall Street equities ended on Wednesday, with all the three major U.S. stock indices dropping on the back of investor’s doubt over the prospect of the peace deal between Ukraine and Russia, which has in turn hurt confidence. The blue-chip S&P 500 index slipped 0.63%, while the Nasdaq declined 1.21%. Instead of a full withdrawal, the U.S. believes Russia is repositioning a small percentage of armies around Kyiv.

European shares retreated as well on Wednesday, as investors’ feeling of achieving a positive outcome during the peace talk has faded away, especially the fact that the Russian forces bombarded the outskirts of Kyiv right after Moscow’s promise of reducing operations over there. Germany’s DAX index was the biggest decliner among the regional indices as it dropped 1.45%, due to having triggered an emergency plan to manage gas supply in case of a disruption of gas delivered from Russia.

In Asia, local markets tracked the performance of the overnight U.S. market, with both the ASX 200 and Japan’s Nikkei 225 declining marginally by 0.2% and 0.44% respectively, following the mid-day session break. HK’s Hang Seng Index fell nearly 1% after three days of consecutive advance in this week, once again at the edge of 22,000 points. Meanwhile, HK’s chief executive Carrie Lam reassured that the city will not abandon the tough zero-Covid policy adopted by mainland China, despite the ease of restrictions. Local business leaders are worried about the on-going tight policies as talents and expats choose to leave HK instead.

Price of WTI crude dropped on today, to currently trade at $104.15 per barrel after President Joe Biden’s announcement of releasing more oils from emergency stocks to tame the uprising oil prices, which could feed into the inflation cycles. Gold fell in range-bound trade on Thursday, currently at $1,929.30 per ounce. In terms of the cryptocurrencies, hackers breached gaming focused blockchain platform and stole $600 million worth of cryptos.

USDCHF Chart (2022.3.31)

Figure 1 (Source: IS Prime) USD/CHF daily: The currency pair drifted lower for the second successive day due to heavy selling bias from the greenback, as well as the Ukraine crisis benefitted the Swiss Franc which contributed to such slide, now hovering around 0.92535.

 Headliner to Review

  • The ANZ Business Confidence Index in New Zealand increased to -41.9 in March 2022 from February’s -51.8. Although it has improved but still in negative territory especially under the circumstances where 96% of firms expecting higher costs as inflation continue pressurize the economy.
  • In U.S. ADP reported 455K jobs being created, higher than the forecasted figure of 450K, boosted by hiring in the services industry. Both the leisure and hospitality sectors led the gains as more jobs are created in bars and restaurants due to the ease of COVID-19 restrictions.

Headliner to Watch

  • The U.S. Non-Farm Payroll data is due to release tomorrow, expect to register 492K jobs in March, with the level of unemployment continue to drop to 3.7% compared to 3.8% from the previous month.
  • ISM Manufacturing PMI is forecasted to tickle up slightly to 58.9 points in the U.S.

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Authors:
Antony Tan
Kerry Man