Market Commentary - May 23, 2022

Wall Street equities ended mixed on Friday after a volatile trading session, with all the major U.S. stock indices clawed back the early losses to finish the day almost flat. For the week, both the S&P 500 and the Nasdaq indices declined 3% and 3.8% respectively, and they have now recorded the seventh straight week of losses, which is the longest losing streak since the tech bubble in 2001. Tesla tumbled 6.42%, which weighed down the blue-chip S&P 500 index after news report of its CEO Musk harassed a flight attendant in 2016, in which Musk has condemned as utterly untrue.

Across the Atlantic, European shares advanced on last Friday, bolstered by the defensive sectors on hopes of economic recovery from its major trading partner China, with all the local indices ended the day higher especially London’s FTSE 100, as it gained over 1%. However, they still ended the week in red territories. Meanwhile, according to the World Health Organization (WHO), monkeypox cases were discovered and transmitted among the local communities across 12 countries, with 92 laboratory-confirmed cases in total. Smallpox vaccine seems to be able to offer some cross-protection against monkeypox, with the efficiency rate reaching 85%.

In Asia, stock market performances are mixed following Monday morning’s market open, as both the Australian and Japan’s benchmark indices are up slightly, while HK’s Hang Seng index slid 1.5%. In Beijing, 94 new COVID cases are detected locally, with the government announced everyone to work from home across the infected districts in order to reduce people mobilities, to make the society “quiet down, slow down” in order to block the virus transmission paths and to eliminate all cases to zero.

Price of WTI crude continue to tick up slightly on last Friday to settle at $112.389 per barrel, as the energy market expects the ease of some COVID restrictions in Shanghai to boost energy demand, because China is the world’s top crude importer. In terms of gold, its prices rose 2% on last week to end a losing streak of 4 weeks consecutively, however, an appreciation of the greenback and the U.S. bond yields could potentially cap the upside gains of the yellow metal. Bitcoins continue to trade in range-bound at around the important level of $30K.

USDCHF charts (2022.5.23)

Figure 1 (Source: IS Prime) USDCHF daily: The Swiss France continued its rally after the president of SNB said on last Thursday that they are ready to act on inflation and reiterated the safe-haven asset status of their currency. The currency pair currently trades at 0.97223, down from the recent peak of 1.00642.

Headliner to Review

  • Retail sales volume in UK rose by 1.4% in April 2022, following a fall of 1.2% in March. Automotive fuel sales, non-store retailing sales volumes and food store sales all increased by 1.4%, 3.7% and 2.8% respectively in April compared to the previous month.
  • In Australia, Anthony Albanese is set to become their 31st prime minister after defeated Scott Morrison at the federal election.

Headliner to Watch

  • The U.S. new home sales report is due to print on Tuesday, projected to fall to 750K in April, from 763K in March as sales have declined dramatically in recent months from a high of 871K recorded in December 2021.
  • A series of manufacturing PMI data will be announced across a few developed nations tomorrow, including Australia, Japan, 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.

Authors:
Antony Tan
Kerry Man