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2811 2022

Market Insights

Market Insights - Week 48

Anupam Kumar

The much-awaited end of the Federal Reserve’s tightening cycle and weakening US dollar could prove to be a tailwind for equity returns across the global market. Favorable earnings report, primarily from the technology and retail sectors, and softening inflation number helped the major stock benchmarks to produce gains over the holiday-shortened week. In the last Federal Reserve policy meeting, many officials were in favor of slowing the pace of interest-rate hike, as per the minutes released on last Wednesday.

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

  • With the last week gain of 60.78 points or 1.5%, the S&P 500 gained more than 12% from the recent mid-October low and closed at 4026.12.
  • Dow Jones Industrial Average index also advanced 601.34 (1.8%) and closed the week at 34,347.03.
  • Nasdaq rose 0.7% and closed at 11,226 whereas, MSCI EAFE grew by 1.2% to reach 1,946.
  • 10-year treasury yield remained flat and lost 0.1% to reach 3.70% however, Oil tumbled and lost 4.2% to close the week at $76.73 per barrel.  For a sixth consecutive week, European shares rose and the pan-European STOXX Europe 600 Index ended the week higher by 1.66%.
  • Germany’s DAX Index and France’s CAC 40 also added 0.62% and 0.88% respectively.
  • The UK’s FTSE 100 Index advanced 1.16% whereas, Italy’s FTSE MIB was almost flat over the last week.
  • 10-year German government bond yields subdued below 2% however UK’s 10-yr bond yields hovered over 3%.
  • Equity markets in Japan made gains over the week with Nikkei 225 Index rising 1.37% and the broader index, TOPIX, gaining 2.59%.
  • At the same time, the yield on the 10-yr. Japanese government bond rose to 0.25% from the previous week’s 0.24
  • The Japanese Yen also strengthened against USD and it closed at 138.7 against prior week’s JPY 140.3.
  • In China, The Shanghai Composite Index gained 0.76% and Hang Seng Index of Hong Kong grew 0.59% while Covid restrictions tightened across China as cases approached all-time highs.

No major reports are scheduled for the first two days of the week. However, on Wednesday, the second estimate of third quarter GDP data is expected from U.S. Bureau of Economic Analysis and on Friday, Jobs and unemployment numbers from United States Bureau of Labor Statistics should be announced. Hopefully, the commentary from Federal Reserve’s officials, inflation numbers and other economic indicators boost investors sentiment and could prove to be favorable for the market growth and for a better year end closing.

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Anupam Kumar

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