Market Commentary – October 04, 2022

Kevin Jock

4th October 2022

Wall Street stocks are beginning the new month and quarter on a strong note as the three major indices closed up over 2% on Monday. The 10-year Treasury note sank 20bps on weaker-than-expected manufacturing data. On the other hand, Tesla is the worst performing stock on the day as it dropped over 8% due to the company delivered few cars than anticipated in the third quarter.

In Europe, regional equities also gained on Monday as it mirrored the outperformance of Wall Street overnight. The FTSE 100, CAC 40 and DAX all rose 0.22%, 0.55% and 0.79% respectively. Meanwhile, the UK government has scrapped its plans to abolish the 45% rate of income tax, which puts the prime minister Truss in a difficult position now as 51% of UK citizens thinks she should resign.

Across Asia, the Australian indices marked its biggest daily jump on Tuesday as it advanced nearly 2.5%, with the mining stocks leading the gains. Likewise, Japan’s Nikkei 225 also performed well today, gaining 2.37% on the day. Meanwhile, both the Chinese and HK markets are closed due to the national holidays in the region.

In terms of commodities, Brent crude rose to near $90 a barrel today, as markets think OPEC will implement the biggest supply cut since 2020, when pandemic spread across the globe. Price of gold jumped sharply yesterday, looking to shoot above $1,700 as the dollar continue to dip for a fourth day in a row.

JP225 chart (2022.10.4)

Figure 1 (Source: IS Prime) Nikkei 225 daily: The Japanese blue-chip stock indices made a significant comeback in the last two days as it rose by more than 1,000 points.

Headliner to Review

  • The September Manufacturing PMI registered 50.9% in the U.S. It indicates an expansion of the overall economy for the 28th month in a row since May 2020.
  • CPI in Switzerland decreased by 0.2% in September, such decline is mainly contributed to the falling price of fuels, hotels and supplementary accommodation.

Headliner to Watch

  • The Reserve Bank of New Zealand (RBNZ) is looking to hike interest rates by 0.5% during its announcement on tomorrow, it would be the fifth straight time of half percentage point hike and likely to continue such tightening phase till next year.
  • ADP non-farm employment figure is due to print on Wednesday, expected to increase by 200K.

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Kerry Man