Market Commentary – September 01, 2022

Kevin Jock

1st September 2022

Wall Street stocks ended the last trading day of August slightly lower, after falling for three consecutive days. Both the Dow and the S&P 500 dropped 3% for the month, while Nasdaq indices lost 4% in August. Investors are clearly worried about the aggressive rate hikes by the Fed and such nervousness may well carried over into September.

Across the Atlantic, European equities slipped on Wednesday as well after the release of higher-than-expected inflation figures across the eurozone, with STOXX 50 fell by 1.25% to six-week lows. The energy sector led the losses as concerns have intensified on the fact that Russia shuts down gas pipeline to Europe.

In Asia Pacific, nearly all the regional stocks opened lower on the first day of September as the downbeat atmosphere from Wall Street overnight reverberate across the markets. The Australian ASX 200 dropped 1.8% and the Japan’s Nikkei 225 declined 1.5%. Manufacturing activity is weak in August after the release of the PMI figures across Japan and China, as the zero COVID policies in China continue to hurt businesses locally.

In terms of WTI crude, it has once again dipped below $90 per barrel yesterday as traders citing fears of softening demand from both China and the West. Price of bitcoin remains barely above the key level of $20K today, after its significant drop back on 26th August. Meanwhile, the Japanese Yen hit a 24-year low against the greenback in early Asia trade today, reaching as low as almost 140 as the dollar continue to appreciate on expectations for a 75bps rate hike.

XAUUSD Daily (2022.9.1)

Figure 1 (Source: IS Prime) Gold daily: Bullion continues to drop on Thursday to hit a five-week low as dollar gains ahead of tonight’s NFP. It is currently barely above the key level of $1,700 per ounce.

Headliner to Review

  • The latest U.S. ADP employment figures turns out to have added 132K jobs in August, falls way short of the expected figure of 300K jobs. Such figure posted the smallest gain since the start of 2021.
  • According to the CPI flash estimate, inflation in the eurozone rose to 9.1% in August, up from 8.9% in July and it could rise further due to the surge of gas prices, which could prompt ECB to deliver a 75bp rate hike in the coming weeks.

Headliner to Watch

  • We will see the release of the U.S. NFP on Friday, looking to add 295K jobs in August, following a stronger than expected gain of 528K positions in July. Unemployment rate is also expected to remain at a low level of 3.5%.

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Kerry Man