Market Commentary - October 11, 2022

Wall Street stocks were subdued on Monday, with both the S&P 500 and Nasdaq indices lost 0.75% and 1.04% respectively. The new export restrictions placed on the U.S. semiconductor sector has derailed the performance of its stocks on the day, as the new export rule mean companies must apply for a license if they want to sell high tech products to China.

Across the Atlantic, European shares are also underperformed yesterday, with investors remain cautious ahead of major corporate earnings this week. The region wide STOXX 50 indices closed down 0.55% on the day, extending losses to a fourth straight session. Geopolitical concerns have escalated further after Russia launched air strikes to target Kyiv as a revenge for the bombing of Crimea bridge.

In Asia Pacific, Japan’s Nikkei 225 index dropped over 2% today, as it has already declined for four days in a row. Likewise, HK’s Hang Seng index performed poorly as well since it has already fell below the key level of 17,000 points. In terms of the positive side, Japan reopened its borders to foreign independent tourists, a move that many hope will boost its economy and kickstart the post-pandemic recovery.

In terms of oil, its price sank by 2% on Monday, after five days of continuous advance last week, as investors think a potential global recession could erode fuel demand. Likewise, the upward trend of gold price has also reversed, dipping for four days to $1,666.16 per ounce. Bitcoin is in a similar shape, failing to break above the $20K level.

Figure 1 (Source: IS Prime) EURUSD daily: Recent decline of the currency pair is mainly due to the appreciation of the greenback, as it was supported by last Friday’s NFP report, as well as the tensions between Russia and Ukraine.

Headliner to Review

• The Sentix Investor Confidence Index signaled a difficult economic situation in Europe, as it still remains deeply in the negative territory at -38.3 points, the lowest level since May 2020.

Headliner to Watch

• The August GDP figure is expected to announce across the UK on tomorrow, with a general acceptance that the economy might continue to contract.
• The U.S. PPI figure is looking to rise marginally by 0.2% month-to-month.

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Authors:
Kerry Man