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Market Insights

Market Insights - Week 1

Anupam Kumar

Date – 02nd Jan’23

It would not be an exaggeration to say that 2022 was a year that many investors may want to forget and put behind them. Just for an example, after three consecutive positive years for the S&P 500, last year it produced its worst annual result since 2008 and declined -19.44%. The Dow was, in comparison, modest however, Nasdaq gave up almost 1/3rd of its value in the year 2022.

Let us highlight some of the major movements of the last week:

  • All the major US indices ended mostly lower in the thin trading of last week of 2022.
  • DJIA, S&P 500 and Nasdaq composite ended the week and the year at 33147.25, 3839.50 and 10466.48 respectively (down by 56.68 points, 5.32 points and 31.38 points in the same order).
  • Weekly jobless claims rose from 215k to 225k but still in line with the expectations and below the peak mid-Nov numbers of 241k.
  • The yield on the benchmark 10-year Treasury note gained over the week in the wake of positive economic surprises and the prospect of faster economic growth in China.
  • On last Friday, oil was trading around USD 80 per barrel, down from a peak of USD 124 per barrel (8th Mar 2022). That means oil still closed the year with a modest gain as at the end of 2021, it was trading around $75 per barrel.
  • European stocks also pulled back in the week of thin trading.
  • The pan-European STOXX Europe 600 Index slipped 0.60% whereas, Germany’s DAX was down modestly.
  • Italy’s FTSE MIB Index and the UK’s FTSE 100 index slipped 0.48% and 0.28% respectively. Meanwhile France’s CAC 40 Index climbed up 0.48%.
  • With the latest (3rd in the year 2022) financial aid package announcement of EUR 10 billion, the Spanish Government provided a total aid of EUR 45 billion last year, to help its households with higher living costs.
  • Japanese Nikkei 225 ended last week down 0.54% and its annual loss was around 9.37% for the year 2022, after four consecutive positive years.
  • Japanese investors were disappointed with the latest Industrial output data which fell 0.1% in November, the third straight monthly decline.
  • Despite the surge in Covid cases, Beijing continued to ease the pandemic restrictions and eventually, Chinese stocks rose over the week.
  • The Shanghai Composite Index gained 1.42% and the blue-chip CSI 300 added 1.13% reversing several weeks of losing trend.
  • The benchmark Hang Seng Index also increased 1.61% over the last week of trading.

In the first Holiday-shortened (on January 2, 2023 most of the Global stock markets are closed) week of 2023, a labor market update, due on Friday is likely to be the most important first economic report of the new year.

Hopefully, we would not see a repeat of the last year’s performance in the year 2023. Investors can see potential inflection points on the horizon and believe that inflation should continue to moderate. The Federal Reserve should pause its rate-hiking campaign in the first half of 2023 and even with a weak economy the scope for a prolonged downturn is very minimal.

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Anupam Kumar

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