Market Insights: Weekly Update (14 March 2022 – 18 March 2022)

Equity markets have seen an improvement over the past week. This is due to falling oil prices, Fed raising interest to curb inflation, Russia avoiding defaulting its sovereign debt and China equities fueled by government optimism.
21 March 2022

Equity markets ended a two-week losing streak and reclaimed some of the ground lost over the past month.

Global Equities (MSCI World Index) gained 6% last week while the S&P 500 was up 6%. MoneyOwl’s Equity portfolio tracks closely, growing 5.04% over this period. Global bonds (Bloomberg Barclays Global Aggregate Bond Index) ended slightly down at -0.64% due to interest rate pressure coming out from the Federal Reserve and Bank of England rate hike decision.

According to analysts, equity markets were supported by multiple factors which include

  • falling oil prices which promote global growth
  • Fed raising interest rate to curb inflation
  • Russia had avoided defaulting on its sovereign debt boosting confidence in credit
  • China had announced more supportive/easing policies for overseas listing

Federal Reserve announces rate hike to curb inflation

On March 16, the Federal Reserve raised its benchmark rate for the first time since 2018 to subdue rampant inflation that is running at the fastest pace in decades. The Fed also outlined their plan to hike six more times this year which would reduce inflation risks but this also spark some recession fears. Investors were eager to hear about the Fed’s plan to trim its balance sheet (Asset Tapering) but no specific details were given.

Russia-Ukraine conflict continues

Talks between Russia and Ukraine continue to show little progress. Some news media reported that talks are showing positive progress, but Russia denies the news. Russia’s Finance Ministry announced that a US$117 million interest payment due on two USD bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default.

China Equities fuelled by government policies optimism

Early last week, China Placed 17.5 million Residents in Shenzhen into lockdown for at least a week to combat a resurgence of Covid-19 infections. The latest round of lockdown in China is another headwind for global growth as many global companies such as Apple have most of their production in China. Additionally, the US Securities and Exchange Commission had announced multiple Chinese companies were at risk of being delisted in US exchange if they did not comply with US auditing rules by 2024. Nevertheless, investors breathed a sigh of relief when China stocks soared after the government vowed policies to support financial markets, boost economic growth and support overseas listing by moving on with discussions with the US over auditing rules.

Read more Market Insights here.

Disclaimer: While every reasonable care is taken to ensure the accuracy of information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. Expressions of opinions or estimates should neither be relied upon nor used in any way as an indication of the future performance of any financial products, as prices of assets and currencies may go down as well as up and past performance should not be taken as an indication of future performance. The author and publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.

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