Market Commentary - May 31, 2022

The U.S. stock markets are closed for a public holiday on Monday. Hence, attention has turned to the European markets instead. European shares ended higher on Monday, supported by China’s easing of pandemic related restrictions and adding of new stimulus, with the FTSE 100, CAC 40 and DAX indices all advanced by 0.19%, 0.72% and 0.79% respectively. The European luxury goods companies are among the top performers, with both the giant LVMH and Gucci owner Kering up by 2.6% and 3.3%. Meanwhile, the release of the German inflation data possibly put further pressure on the ECB of a half percentage point interest hike in July. On the other hand, the U.S. president Joe Biden said that they will not send long-range rocket systems to Ukraine that can strike into Russia, whereas the Russian television mentioned that supplying such weapons would cross the red line.

In Asia Pacific, Australian shares inched lower on Tuesday morning, down by 0.45% after achieved two straight sessions of broad gains. China’s blue-chip CSI 300 index hiked nearly 1% even though its newly released manufacturing PMI index recorded another contraction as factory activities are suppressed under the lockdown, but it is improving as the figure is the highest in three months, gradually approaching the critical point of 50 points. HK’s Hang Seng index gained marginally by 0.4% shortly before the mid-day session break, with John Lee being appointed as the next chief executive officially, during his four-day trip to Beijing as he met up with the top Chinese leaders.

Oil prices rose higher on Monday, with brent crude now once again above $120 a barrel, to its highest level in two months as increasing prices for fuels including gasoline, as well as tight supplies of refined products all add up to the current rising trend of oil. Bitcoin price jumped in this week to over $32K USD, from the closing price of last week at $28.7K USD. Sterling edged higher against the greenback to near one-month high as USD depreciates, currently at $1.26116.

USDCAD charts (2022.5.31)

Figure 1 (Source: IS Prime) USD/CAD daily: The Canadian dollar appreciated to its highest level in more than five-weeks against the U.S. dollar yesterday, to $1.26502, as positive current account surplus data boosted the CAD, along with an expected interest rate hike this week from Bank of Canada.


Headliner to Review

  • Inflation in Germany continue to rise as their preliminary CPI figure in May printed 0.9% month-to-month, higher than the expected figure of 0.5%. The continuous surge of inflation is still driven by the war in Ukraine which pushed up energy and commodity prices.
  • The Spanish flash CPI figure also hiked more than the forecasted number of 8.4% year-on-year, at 8.7% instead.

Headliner to Watch

  • Q1 2022 GDP data in Australia is due to release on Wednesday, expected to register at 0.6% which is much lower than the 3.4% increase from the previous quarter.
  • The U.S. JOLTS job openings report is anticipated to have 11.4M jobs in April, down from 11.55M in March as the labour market is becoming tighter.
  • A series of Manufacturing PMI data will be announced across various countries, including Japan, China, Spain, Switzerland, Italy, France, Germany, Eurozone, UK, Canada 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