GLOBAL MARKETS - WEEKLY REPORT - 21st May 2022

GLOBAL MARKETS - WEEKLY REPORT - 21st May 2022

Global Market Summary

Economists and Analysts views are emerging, that there is a real prospect of recession in US Market. Data leads towards this; US Inflation hit 40 years high, NASDAQ and other markets entering the bear market, and serious debate over soft vs hard landing of US Economy. Time will tell if the Economy manages the soft landing or overshoots the runway or land the plane too hard all suggest risk is emerging. Indian finance minister statement that, “India’s economy growth is likely to be robust at 8.9 percent in the current financial year, removed all doubt about stagflation picture portray by some Economists.?

?The US stock Market tumbled this week again for the seventh straight week after entering the bear market. The S&P 500 Index dropped -3.03%, the Dow Jones Industrial Average dove -2.90% and the NASDAQ composite Index lost -3.82% this week. One of the largest streaks of consistent weekly loses for all the three indexes since November 2020. On YTD basis the performance of the three Indexes, NASDAQ Index -27%, S&P 500 -18%, and DOWJONES Index -14%. NASDAQ Index wiped out all its Gain made during the Last year & started showing negative return in 2-year period.

Asian Markets remains as the bright spot across the Region. A new trend has emerged in the recent week; Asian Markets dissociated themselves from US & European Markets’ deep correction. All the Asian Markets closed with a big gain. The Japan NIKKEI, the Australia ASX30 and the Korea KOSPI gain 1.18%, 1.01% and 1.52% this week respectively. The India SENSEX closed the week with a gain of 2.90% at 54,326. The Hong Kong HIS Index gain 4.11% whereas the China CSI Index gained 2.02% this week. The Singapore STI Index, the Australia ASX30 Index and the India SENSEX Index stood out as the best performing Markets outperforming its Asian counterparts.

?European Stock Markets are weighting the impact of Ruble linked payment towards energy supply from Russia and threat to stop the supply impacted the European Markets. The UK FTSE 100 lost 0.38% this week and remains as the best performing market in Europe. The Italy FTSE MIB Index gained 0.19% The Germany DAX & France CAC40 lost 0.33% & 1.22% respectively. The Russia MOEX Index gained 2.85% this week. On YTD basis the worst performing markets are the Russia MOEX which lost -37%, the Italy FTSE MIB dropped -12%, the Germany DAX dove -12%, and the France CAC 40 corrected -12% respectively. Germany DAX Index wiped out 76% of its Gain made during the Last year.

?Global Bond Market started cooling off on monthly chart, and even on weekly chart for the US Market. US Treasury 10 Year Bond after holding it above 3.0% as we indicated in our earlier report dropped 21 Basis Points successive second week drop. UK Treasury’s 10 Year Bond has seen 15 raised. India Treasury’s 10 Year Bond has seen a 4 Basis Point jump up closed at 7.35%.

?Nervousness and volatility have been seen in the Commodities Market due to conflict in the European Region. Russia’s demand from EU countries to pay for their energy supply (Gas & Crude Oil) in Ruble, kept the Oil price above $110 level. Natural Gas after a strong northward journey has seen big spike and trading, above $ 8 hit by supply disruptions and Ruble linked payments demand. We clearly see OIL trading above $120 barrel mark in the coming week & Natural Gas to stabilize around 7 in short term. Gold and Silver closed the week with a gain of 2.22% and 3.14%. Natural Gas has been seen a weekly gain of 5.48% & YTD gain of 117%.

Asian Markets

Asian Markets remains as the bright spot across the Region. A new trend emerged in the recent week; Asian Markets dissociated themselves from US & European Markets’ deep correction. All the Asian Markets closed with big gain.

The Singapore STI Index, the Australia ASX30 Index and the India SENSEX Index stood out as the best performing Markets outperforming its Asian counterparts. On YTD basis STI Index closed with around 2% gain, ASX30 Index at 4% losses and SENSEX Index at 7% losses.

?The Japan NIKKEI, the Australia ASX30 and the Korea KOSPI gain 1.18%, 1.01% and 1.52% this week and closed at 26,739; 7,146 and 2,639 respectively. The India SENSEX closed the week with a gain of 2.90% at 54,326.

?Beijing’s strong push to stabilise the financial market and stimulate the economy helped; but a new variant and lockdown in China impacted both the markets. The Hong Kong HIS Index gain 4.11% whereas the China CSI Index gained 2.02% this week.

?On YTD basis three worst performing markets in this region are: CSI Index down around -14%, KOSPI Index down -11% and HIS Index down -11% respectively. As indicated in our earlier report we have seen a big reversal in China CSI Index and Hong Kong HIS Index.

US & Canada Markets

The US stock Market tumbled this week again for the seventh straight week after entering the bear market, loss mounting on the back of a higher inflation number and Fed rate hike.

The S&P 500 Index dropped -3.03%, the Dow Jones Industrial Average dove -2.90% and the NASDAQ composite Index lost -3.82% this week. One of the largest streaks of consistent weekly loses for all the three indexes since November 2020.

On YTD basis the performance of the three Indexes, NASDAQ Index -27%, S&P 500 -18%, and DOWJONES Index -14%. NASDAQ Index wiped out all its Gain made during the Last year and started showing negative return in 2-year period.

European Markets?

European Stock Markets are the most impacted one due to its proximity to the geopolitical escalation in the region. Russia’s demand from EU countries to pay for their energy supply (Gas & Crude Oil) in Ruble and a threat to stop the supply impacted the EU Markets.

The UK FTSE 100 lost 0.38% this week closed at 7,390. It remains the best performing market in Europe. The Italy FTSE MIB Index closed the week at 24,095 gained 0.19% The Germany DAX & France CAC40 lost 0.33% & 1.22% respectively. The Russia MOEX Index gained 2.85% this week & closed at 2,372.

On YTD basis the worst performing markets are the Russia MOEX Index lost -37%, the Italy FTSE MIB dropped -12%, the Germany DAX dove -12%, and the France CAC 40 corrected -12% respectively. Germany DAX Index wiped out 76% of its Gain made during the Last year.

Currencies Markets

Dollar weakness seen across currency markets on backdrop of deep correction in the US Market. The most stable currencies against Dollar are SGD, AUD and INR which depreciated the least around 2%, 3% and 4% respectively on YTD and the most impacted one are JPY, GBP and EUR respectively.

EURO after touching a new low and closed the week at $1.0564 with a gain of 1.46%. Similar movement observed in the GBP with a weekly gain of 1.78% at $1.2480. The AUD also gained 1.44% this week and closed at $0.7040. The Japanese yen closed this week at 127.88 with a gain of 1.04% point.

The Indian Rupee depreciated around 0.57% point this week and closed at 77.58. It’s the only currency maintaining its strength with very little impact from the Federal Reserve rate hike & RBI accommodative stance. The Singapore Dollar closed the week with a loss of 0.98% at 1.3811.

Commodities Markets

Nervousness and volatility have been seen in the Commodities Market due to conflict in the European Region. Russia’s demand from EU countries to pay for their energy supply (Gas & Crude Oil) in Ruble, kept the Oil price above $110 level. Natural Gas after a strong northward journey has seen big spike and trading, above $ 8 hit by supply disruptions and Ruble linked payments demand. We clearly see OIL trading above $120 barrel mark in the coming week & Natural Gas to stabilize around 7 in short term.

?Crude closed the week with a loss of 0.21% & YTD gain 47% at $110.28. Brent Oil price has seen a weekly gain of 0.90% & YTD gain 45% closed at $112.55.

?Bullion Market has seen a big reversal on the back of US Market deep correction & entered bear market; Gold and Silver closed the week with a gain of 2.22% and 3.14% at $1,848 an ounce and $21.67 level respectively. We expect bullion market to show a strong gain in the coming month.

?Natural Gas has been seen as one of the biggest swings this week again with a strong weekly gain of 5.48% & YTD gain of 117% closure at $8.0801. Natural Gas trading close to lifetime high.

Bond Markets

?

Global Bond Market started cooling off on monthly chart, and even on weekly chart for US Market. US Treasury 10 Year Bond after holding it above 3.0% as we indicated in our earlier report dropped 21 Basis Points to closed at 2.78% successive second week drop.

UK and Germany Treasury’s 10 Year Bond has seen 15 & 0 Basis Points raised closed at 1.89% and 0.94% respectively.

?India Treasury’s 10 Year Bond has seen a 4 Basis Point jump up closed at 7.35%. RBI recent Monetary Policy measures involved liquidity tightening measures pushed the yield curve towards north. We expect such measure will help to retain the growth momentum and to curtail Inflationary pressure.

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