Market Commentary – October 14, 2022

Kevin Jock

14th October 2022

Wall Street stocks experienced a dramatic comeback on last night, after posted early losses due to a higher-than-expected CPI data, which prompted investors to believe that the Fed may act more aggressively than anticipated to bring down inflation. All three major stock indices rallied over 2% on the day, with the financial stocks leading the gains.

European equities also bounced back on Thursday from a near two-year low touched earlier in the session, with both the CAC 40 and DAX indices rose 1.04% and 1.51% respectively. However, it is still not clear of whether such rebound is simply a technical buying, or a fundamental driven move.

Across Asia, regional indices are all up since the opening today, mirroring the positive performance from the overnight U.S. markets. Japan’s Nikkei 225 jumped 3.3%, while HK’s Hang Seng index advanced nearly 3% as well, to 16,873 points.

In terms of commodities, the U.S. WTI crude is looking to head for weekly losses due to the spike of COVID cases in China, which could potentially reduce the demand of the product. Likewise, bullion will also end the week with a loss amid fears of more rate hike by the Fed, currently trading at $1,669.78 per ounce. Meanwhile, the dollar index changed a little after falling 0.5% in the previous session.

USDJPY chart (2022.10.14)

Figure 1 (Source: IS Prime) USDJPY daily: The dollar is currently trading near the 32-year peak against the yen at around 147.315. Investors are watching for an intervention from the Japanese government to prop up the fragile currency.

Headliner to Review

  • U.S. CPI rose more than expected on last month, at the rate of 0.4%, which is twice what economists had estimated. Both food and shelter costs are the main contributors to such increase as they all advanced 0.8% and 0.7% respectively.
  • U.S. unemployment claims came out to be 228K in the week ending October 8, which is slightly above the estimates of 225K.

Headliner to Watch

  • We will see the release of U.S. retail sales figure this evening, expected to increase by 0.2% month-to-month.
  • The Empire State Manufacturing Index is due to print on next Monday across the U.S., previously it declined by 1.5%.

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Authors:
Kerry Man