Market Commentary – September 22, 2022

Kevin Jock

22nd September 2022

U.S. market slumped on Wednesday, with all the major indices dipped nearly 1.7% as investors digested Fed’s hawkish comment, as it lifted interest rates by 75bps to 3-3.25% range. Market participants had expected such an increase and are expecting more rate increase in the coming months.

The performance of European equities had a stark contrast compared with overnight Wall Street stocks, as it ended higher on Wednesday, with the broad benchmark STOXX 50 closed 0.71% higher. Apart from the Fed’s announcement, the other important piece of news is coming from the Eastern front, in which Putin decided to mobilize its reserved armies to support the invasion of Ukraine, in an attempt to annex more territories.

Across Asia, all the regional stock indices are down on Thursday morning, mirroring the poor performance from the overnight U.S. stocks. Japan’s Nikkei 225 index opened down 0.95% and testing the 27,000 psychological level repeatedly, as it has now fall to two-month low ahead of BoJ decision. Likewise, the Shanghai Composite Index is testing the key level of 3,100 points as well.

In terms of commodities, price of Brent crude remain bumpy as it sank yesterday after the Fed rate hike, however, managed to claw back some of the losses to rise above $90 a barrel today. Bitcoin prices remain downbeat as investors flee from risky assets, currently trading at $18,700. In contrast, dollar hit a new 20-year high and has retained good momentum so far this week as investors seek for safe-haven assets, with the U.S. Dollar Index trading above 111 points today.

Hang Seng Index Chart (2022.9.22)

Figure 1 (Source: IS Prime) Hang Seng Index daily: HK’s blue-chip index briefly lost the key level of 18,000 points in early trading today, to reach a new low since 2011, with both the tech and casino stocks leading the losses.

Headliner to Review

  • Existing home sales figure in the U.S. fell to 4.8M in August, from 4.82M in July as mortgage rates and prices continue to rise which weighed on potential buyers.
  • The Fed raised its benchmark rate by 0.75% for the third time in a row, during yesterday’s press conference.

Headliner to Watch

  • We will see the release of a series of Services & Manufacturing PMI indices across various developed nations on Friday, including Australia, France, Germany, eurozone, UK and the U.S.

Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice.

Kerry Man