Market Commentary - June 28, 2022

U.S. stocks dropped slightly on Monday, following a bounce last week. Investors are currently finding it difficult to reassess the economic outlook and waits for the meetings of the major central banks around the world for further hints. The S&P 500 index dropped marginally by 0.3%, while the Nasdaq indices dipped 0.72% at the market close.

In Europe, regional equities closed at a two-week high on Monday, boosted by miners, with both the FTSE 100 and DAX indices rose by 0.69% and 0.52% respectively. The Dutch multinational conglomerate Prosus is the star on the day as it rallied over 15% after the company said they will gradually sell its 28.9% stake in Chinese tech giant Tencent. Meanwhile, NATO has decided to increase its forces on high alert to 300,000 in response to Russia’s invasion of Ukraine.

In Asia Pacific, regional shares are mixed on Tuesday morning with investors contemplating about the volatile Wall Street sessions overnight. Both the mainland Chinese and HK markets are down slightly during the day, while the Nikkei 225 index declined marginally by 0.15% at the mid-day break. In Japan, their governments called on businesses and the public in Tokyo area to conserve electricity use due to a lack of generating capacity.

In terms of commodities, oil prices rose further on Monday as the G7 meeting continues, with the members looking to reduce Russia’s hydrocarbon revenues while diminishing the collateral damage along with it. Bullion price closed down to settle at $1,822.66 per ounce yesterday and bitcoin trading in rangebound at $20.6K.

Figure 1 (Source: IS Prime) U.S WTI crude daily: Crude oil prices traded higher this week and looking to snap a two-week losing streak, as both positive economic data from the U.S. and growth-related comments in China helped to lift the sentiment of oil prices.

Headliner to Review

• U.S. durable goods orders rose 0.7% in May, which is unexpected as market consensus thinks it should only rose by 0.1%. This is the third consecutive increase on a monthly basis.
• Pending home sales in the U.S. also rose unexpectedly in May, by 0.7% v.s. -3.5% expected, even under the condition where homebuilder sentiment soured.

Headliner to Watch

• The ECB, BoE and the Fed’s chairs are all looking to deliver speeches on Wednesday, with analysts believing that the ECB may be least likely to hesitate about raising rates.
• Retail sales figures are due to release in Japan, looking to hike by 4% year-on-year as the country continues its reopening phase.

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Authors:
Antony Tan
Kerry Man