2022/03/03 (013) Column

Wall Street Closes Down
The dollar index gained further ground Thursday
WTI crude futures slipped from their highest level since 2008,
while european shares fall sharply & Germany`s DAX hits 13-month Low


Wall Street Closes Down
The Dow Jones lost around 0.3%, while the S&P 500 and the tech-heavy Nasdaq underperformed, falling 0.5% and 1.6%, respectively, as investors remained focused on the Russia-Ukraine conflict and Federal Reserve Chairman Jerome Powell’s Senate testimony. Technology shares were among the worst performers, with the prospect of higher interest rates threatening to undermine the valuations of those companies, whose profits lie further in the future. Powell confirmed that a 25 basis point rate would come in March while opening the door for a more aggressive move if inflation does not abate as expected. Meanwhile, initial jobless claims fell way more than anticipated to an eight-week low of 215K, and the Challenger report showed job cuts were the lowest in three months. Snowflake plunged over 15% after the company issued weaker-than-expected sales guidance. Kroger climbed over 11%, while Best Buy added over 9% following upbeat earnings reports. US Tech 100 Index traded at 14057 this Thursday March 3rd, decreasing 226 or 1.58 percent since the previous trading session. Looking back, over the last four weeks, USNDX lost 4.34 percent. Over the last 12 months, its price rose by 12.78 percent. Looking ahead, we forecast US Tech 100 Index to be priced at 13863 by the end of this quarter and at 13027 in one year, according to Trading Economics global macro models projections and analysts expectations.

The dollar index gained further ground ThursdayThe dollar index gained further ground Thursday, breaking above the 97.93 level for the first time since June of 2020. Market moves came as investors reacted to an expected looming policy tightening cycle. During a Senate hearing on Thursday, Fed Chair Powell once again pointed to a 25 basis point rate hike in March but opened the door for a more aggressive move if inflation does not abate as anticipated. The most pronounced buying activity was against the euro, with inflation in Europe surging to a record high of 5.8% in February, putting the ECB policymakers in a tough spot next week when they meet to set policy amid the fog of war.

The benchmark 10-year Treasury note yield was around 1.86%
The benchmark 10-year Treasury note yield was around 1.86%, rebounding sharply from a two-month low of 1.68% hit early in the week. Market moves came after Fed Chair Jerome Powell told US lawmakers the US economy no longer needs such an accommodative policy stance, signalling a 25 basis point rate hike in March. Aside from Powell’s remarks, investors continued to follow developments around the Russia-Ukraine war. source: U.S. Department of the Treasury

European Shares Fall Sharply, DAX Hits 13-Month Low
European equity markets fell sharply on Thursday, with Germany’s DAX down more than 2% to a 13-month low as the war in Ukraine enters its second week and investors worry over how the current surge in commodity prices will impact inflation and therefore monetary policy decisions. Across sectors, travel and retail stocks were the worst performers while mining shares gained. Also, the energy sector tumbled almost 4%, as oil whipsawed. Meanwhile, banks declined about 1.5%, extending losses from earlier in the week amid concerns about their exposure to Russia, as well as receding expectations of rate hikes from the ECB. On the data front, services PMIs for the Euro Area, Germany and France were revised lower while fresh figures for Italy and Spain topped forecasts. Elsewhere, growth in the US services sector slowed unexpectedly in February to a one-year low. On the earnings front, Lufthansa said it could not provide a detailed outlook for 2022 due to the war in Ukraine and the pandemic.

The euro weakened further to below $1.11The euro weakened further to below $1.11, the lowest since May 2020 as the outlook of the bloc’s economy deteriorated following Russia’s invasion of Ukraine and Western sanctions, raising uncertainty on the ECB’s policy path. While growth likely will take a hit from the current war in Eastern Europe, hopes that inflation would start to peak in the early part of 2022 faded as the energy crisis threatens fuel costs to speed up even further. Minutes from the ECB February monetary policy meeting, that occurred before the war in Ukraine, showed policymakers considered inflation was likely to remain elevated for longer than had been expected. Money markets price in a 95% chance of 30bps of ECB rate hikes by December, from 20bps on Wednesday but still below 40bps seen late last .