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Archinomics Weekly - Monday 7th February 2022

one year ago

the
MARKETS

Equities

US markets closed the week higher, despite significant volatility among the tech heavyweights, as energy stocks outperformed. European markets took fright at forecasts of higher interest rates and ended the week lower. Japan’s main indices rallied late in the week on hopes that international travel would soon be resumed, while Chinese markets were closed for the Lunar New Year holiday.

Bonds

Yields on US Treasury bonds moved to their highest levels since late 2019, as prices fell, in anticipation of rising rates. The German Bund yield touched a three year high, as ECB (European Central Bank) rhetoric turned hawkish. Investment grade bonds enjoyed some bargain hunting, while high yield bonds followed equity markets higher.

Currencies

The euro jumped higher against all majors, while the US dollar fell across the board. Sterling made gains against both the dollar and the yen, which saw subdued trading.

Commodities

The price of oil rose above $90 per barrel, as major oil producers agreed to only modest production increases, despite a pick-up in demand. Copper closed the week 4.1% higher.

Responsible investing

Consumer goods giant Nestlé announced plans to triple its cocoa sustainability funding to $1.4 billion, aiming to remove child labour from the supply chain for chocolate.

MACROECONOMIC
UPDATE

US January non-farm payrolls came in at 467,000, triple the market forecasts. The unemployment rate ticked up to 4%, whereas Eurozone unemployment hit a record low at 7%.


The ECB declined to rule out interest rate hikes in 2022, amid ‘unanimous concern about soaring prices’.


In China the January Caixin Manufacturing PMI of smaller private firms fell into contraction territory at 49.1, the lowest level since February 2020.


on the
RADAR

US January headline CPI inflation is expected to increase slightly to 7.3%.


Earnings from major consumer goods and car manufacturers will help to gauge the strength of consumer confidence.

Listen to our weekly podcast for more information and our experts’ insights.

Architas

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Insight

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Tensions between the US and China rose after the US shot down a balloon, which it alleged that China was using for the purposes of espionage. The US also warned China against supplying Russia with weapons, saying it could risk escalating the war in Ukraine.

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Archinomics Monthly - December 2022

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