Market Commentary - May 11, 2022

In U.S., its local stock markets advanced in the early morning yesterday but was then hammered later on in the day to close the trading session almost flat, with both the Dow and the S&P 500 indices finished the day -0.26% and +0.25% respectively. Such large market swings may well continue since the Vix index is still way above the long-term average of 20 points, currently at 33.08 points. On the other hand, Tesla CEO Musk said he would reverse Trump’s Twitter ban as it was morally wrong.

European stocks made a little comeback on Tuesday as traders returned to the market to purchase beaten-down shares after a dramatic selloff the day before. All the major European stock indices closed the day slightly higher, especially German DAX in which it rose by over 1% after the release of better-than-expected investor sentiment data in Germany. Meanwhile, Ukraine has upgraded their aims of the war and looking to push Russian forces out of the country, however, they still require ample assistance of heavy weaponries from the western allies.

Across Asia, both Australia’s ASX 200 and Japan’s Nikkei 225 indices edged up marginally by 0.18% towards today’s market close. While HK’s Hang Seng Index closed up by nearly 1%, approaching the psychological level of 20,000 points. Consumer prices in China climbed at a faster pace in April as COVID lockdowns further exacerbated supply-side pressures.

Oil price bounced back on Wednesday as investors await U.S. inflation data this evening, with WTI crude jumped over 3% to currently trade at $102.62 per barrel. Gold price managed to claw back from a three-month low today as both the U.S. dollar and Treasury yields weakened, at $1,851.38 per ounce, while bitcoin markets remain very volatile and moving towards dips at around $31.5K, having trouble to reverse the trend strongly.

USDTRY charts (2022.5.11)

Figure 1 (Source: IS Prime) USD/TRY daily: The lira is once again come under renewed depreciation pressure against the greenback, as it has climbed above 15 to reach a fresh 2022 highs on today.

Headliner to Review

  • The German ZEW Economic Sentiment index printed -34.3 points in May, an increase of 6.7 points from last month but still at a relatively low level which is the third decrease of the indicator since the start of the war in Ukraine. Lockdown situation in China certainly put a heavy weight on the future development of the German economy.
  • Household spending in Japan beats expectations as it recorded a 2.3% drop which was smaller than the forecasted figure of a decline of 3.2%. However, higher living costs may negatively affect such consumption recovery as inflation in Japan has reached multi-year high.

Headliner to Watch

  • UK preliminary quarterly GDP figure is due to announce on Thursday, expected to hike by 1%.
  • Monthly PPI figure in U.S. is expected to decelerate marginally, to a monthly rate of 0.5% with the annual rate also expect to drop to 10.7% from a record 11.2% in March.

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Authors:
Antony Tan
Kerry Man