Market Commentary – September 27, 2022

Kevin Jock

27th September 2022

Wall Street stock indices continue to plunge on Monday, with both the S&P 500 and Dow closing lower by more than 1%, as investors concerned that the Fed’s aggressive monetary tightening could force the U.S. economy into a recession.

Across Europe, regional stocks remain pretty much flat yesterday, with the exception of the Italian indices as they outperformed European peers after the far-right leader Meloni won the national election and is on course to become the country’s first female prime minister.

In Asia Pacific, the Australian indices edged up slightly on Tuesday morning, boosted by energy and mining stocks. Likewise, Japan’s Nikkei 225 is up by 0.74% before the mid-day trading break. Meanwhile, the World Bank forecasted that China’s economic output will lag behind the rest of Asia, due to Xi’s strict COVID policies which sapped consumer activities across the country.

Price of oil continues to selloff this week, as bears in control of the market, with Brent crude trading as low as $83.42 per barrel, which is the low since early January of this year. Bullion did not fare any better either, as it fell sharply throughout the week, with the price of dollar skyrocketed. The session low of $1,629.94, marked a bottom since April 2020. Furthermore, price of bitcoin seems to struggle to stay above the $20K benchmark.

GBPUSD Daily (2022.9.27)

Figure 1 (Source: IS Prime) GBPUSD daily: The pound plummet to a record low on Monday, at $1.035 before stabilising around $1.07, after the UK chancellor announced to deliver £45bn of tax cuts and package to curb rising energy bills.

Headliner to Review

  • The German ifo Business Climate index came out to be worse than the forecasted figure of 86.9, at 84.3 as their economy scrambles to avoid a gas shortage this winter.
  • ECB president Lagarde said on Monday that they intend to continue to hike rates at its coming meetings even as economic prospects are deteriorating, since inflation is far too high.

Headliner to Watch

  • The newest U.S. pending home sales figure is due to release on Wednesday, forecasted to dip slightly by 0.9%.
  • We would expect the Australian retail sales statistics to go up marginally by 0.5% tomorrow.

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Authors:
Kerry Man