Market Commentary - June 09, 2022

The U.S. equity markets dropped on Wednesday, with nearly 90% of the stocks in the blue-chip S&P 500 benchmark in red territory as Treasury yields rose above the psychologically important 3% level. Both the Dow and the Nasdaq indices declined 0.81% and 0.73% respectively.

European stocks did not perform well either, as the broad benchmark STOXX 50 dipped 0.47% on Wednesday. Financial stocks are among the worst performers as investors weighed up the implications of higher rates for economic growth, with Credit Suisse led the losses when the mega-bank foresee a group-wide loss in the second quarter.

In Asia Pacific, the Australian shares slipped on Thursday, caused by banking stocks extending losses after the central bank increased interest rates that are higher than the market consensus, with the ASX 200 index currently dropping over 1%. On the other hand, HK’s Hang Seng index is looking to snap four days of consecutive rally as it has declined 0.78% in this afternoon, below 22,000 points.

In terms of commodities, price of oil continues to rise on a stepwise basis, reaching a near 13-week highs on today after China reported better than expected export statistics in May. Bitcoin price currently in a range bound market, stays narrowly above the $30K level. Meanwhile, the Japanese yen continue to slide against the greenback, to as low as ¥134 per dollar on expectations that the BoJ will keep monetary policy loose.

EURGBP charts (2022.6.9)-1

Figure 1 (Source: IS Prime) EUR/GBP daily: EUR/GBP pair will wait for the ECB’s rate decision tonight. If the central bank turns hawkish as expected by the market consensus, then we would likely to see the euro strengthen against the pound.

Headliner to Review

  • Unemployment rate in Switzerland came out to be 2.2% in May, in line with expectations.
  • Revised Q1 2022 GDP figure in the euro area increased 0.6%, while employment was also up by 0.6%. Ireland recorded the largest increase of GDP as it rose 10.8% compared to the previous quarter.

Headliner to Watch

  • The latest update of U.S. CPI is due to release on Friday, forecasted to further hike by 0.7% in May. We will see whether the updated reading can give us further clues on whether U.S. inflation have peaked, or if price pressures are likely to accelerate more.
  • Unemployment rate in Canada is expected to register 5.2%, unchanged compared to the previous month.

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Authors:
Antony Tan
Kerry Man