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1409 2022

Market Insights

Market Insights - Week 36

Anupam Kumar

Amid the focus on US Federal rate hike announcement, inflation and the economic conditions across the globe, last week, market ended green and left three weeks of continuous losing streak. It looks like after losing most of its summer gain, market found its bottom, might be a temporary one! On the other hand, following Russia’s decision to cut off all energy flows to Europe via Nord 1 pipeline for indefinite period, a recession in Europe later this year, seems inevitable.

Some of the highlights of the last week:

  • Crude oil prices briefly touched their lowest point mid-week since Ukraine invasion.
  • 10-year U.S. Treasury note yield grew to its highest level since mid-June 2022.
  • Indices in Europe rose after some announcement of dealing with the energy crisis.
  • Stoxx Europe 600 index grey by 1.06%, Germany’s DAX index by 0.29% and CAC 40 index of France ended the week 0.73% higher.
  • The UK’s FTSE 100 and Italy’s FTSE MIB also grew by 0.96% and 0.73% respectively.
  • The deposit rate in Europe reached to 0.75% after ECB increased its key interest rate by 75 basis point to tame inflation.
  • The measures taken by ECB showed a positive impact on Euro which rose above parity with the green back, U.S. dollar.
  • Asian stock market also showed gains where, Japan’s Nikkei 225 index grew by 2.04% over the week and Shanghai Composite Index advanced 2.4%.
  • The Yen hit multi-decade lows versus USD, fell to its lowest level in roughly 24 years.

It looks like inflation has peaked across the globe and gradually it should moderate. At the same time, unemployment is at 3.7% which is little up than that of July’s data of 3.5%. The headwinds of monetary policies have raised the risk of recession however, economic conditions across the countries, seem to return back to positive territory for the second half of the year. For the remaining weeks of September, all eyes will be primarily on U.S. CPI inflation data, expecting it show further easing. We expect that inflation cooling off should have a decent positive impact on market.

We will come back with more updates!

Anupam Kumar

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