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2612 2022

Market Insights

Market Insights - Week 52

Anupam Kumar

Market Insights Week 52

Date – 26th Dec’22

With one week left in 2022, it is going to be closed as the most challenging year for investors in more than a decade. Across the year, multiple headwinds hit the global market as well as the economy. The S&P 500 is down more than 18% YTD (year to date) on a total return basis and definitely on the track for its worst year since the subprime crisis of 2008.

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

  • Last week was relatively quiet because of the holiday season where the Dow Jones Industrial Average (DJIA) and S&P Midcap 400 Index closed with modest gains.
  • The NASDAQ composite lost almost 2% over the week, despite recording its best daily gain since November on Wednesday. It shed 207.55 points to close at 10,497.86 and it took the percentage YTD change to a whopping -32.90%.
  • Due to winter storms, U.S. refiners shut down capacity and on the other hand, Russia is expected to cut its oil output. These two reasons impacted the price of US crude oil and it rose to nearly USD 80 per barrel showing a weekly gain of 7%.
  • The surprise decision of BOJ (Bank of Japan) to widen the allowed yield’s band of 10-year Japanese Government bond (GJB) impacted the US treasury curve. The benchmark 10-year note yield reached 3.73% up from 3.48% at the end of prior week. It is imperative to note that bond prices and yield move in opposite direction.
  • Amid signs of slowing inflation and an improvement in consumer confidence, European market shares showed modest gains.
  • The pan-European STOXX Europe 600 Index gained 0.64% whereas Germany’s DAX index and France’s CAC 40 index added 0.34% and 0.81% respectively.
  • The UK’s FTSE 100 index advanced 1.92% and Italy’s FTSE MIB index ended 0.80% higher.
  • Japanese stock market tumbled over the week where the Nikkei 225 index shed 4.69% and the broader TOPIX index declined 2.68%.
  • Japanese Govt. bond’s (JGB) yield finished the week around 0.40% level, up from the prior week’s 0.25%, after the BOJ’s unexpected announcement.
  • The announcement also supported the Japanese currency and yen strengthened to about JPY 132.55 against the US dollar, from 136.71 the previous week.
  • On Friday, Japanese Govt. reported the inflation annual rate of 3.7% which is rising at the fastest pace in more than four decades.
  • In China, the spike in covid-19 cases weighed on the country’s growth outlook and the Shanghai Composite Index sank 3.85%.
  • The blue-chip CSI 300 fell 3.19% whereas the benchmark Hang Seng index added 0.7% over the last week.

In the coming year 2023, we assume that inflation and central bank actions will continue to remain in the driver’s seat. However, global market conditions could slowly start favoring the market as we move ahead next year, which is already visible in recent data coming from different major economies of the world. The final week of 2022 will be a light one in terms of economic reports. However, a report on home prices will be released on Tuesday, followed by pending home sales on Wednesday and weekly data on unemployment claims on Thursday.

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Anupam Kumar

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