21 MAR 2022 – Monday Market Highlights – Transcript

Brendan Larsen
Good morning. It’s Monday 21st March and I’m bringing from Milford. globally. The key piece of economic news this week was the FOMC. The Fed continued with their hawkish pivot hiking rates by 25 basis points, and outlining a dot plot which indicated a median estimate of seven hikes this year. Importantly, there were seven policymakers that had dots above 1.875% and one.as. High as 3.1 to 5% by the end of 2022. This suggests there is someone that committee did see a significant front loading of policy tightening this year. Immediately after decision, equity markets faded, given the steeply front loaded projections. However, during the press conference, Powell insisted that the economy labor market was strong, and that it would be able to withstand rate hikes. The s&p 500 went on to finish the session 2.24% Higher, the biggest one they gained since April 2020. In other global news, the ramifications of ongoing conflict in Ukraine continue to well markets. The London Metal Exchange reopened trading in nickel this week after suspending trading on March 8, following a 250% price spike over a 24 hour period following Russia’s invasion of Ukraine. The LMA had installed circuit breakers in an attempt to control volatility. However, these didn’t work and nickel immediately traded through them. The implications of such disorderly markets are widespread, given the large margin calls being required for speculators and hedges who had short positions in the middle. To provide context in the US I still have five cent coins called nickels, which compose a 25% nickel and 75% copper. At the current prices for these commodities, the mount value is worth about 10 cents or double at face value. The other interesting global development this past week was the extreme volatility seen in Chinese equity markets. This was driven by a myriad of issues such as regulatory change new lockdowns in China following recent COVID outbreaks, and geopolitical conflict, as the FT reported Russia had asked for China’s military assistance and Ukraine. At the end of the week, Chinese policymakers vowed to ensure stability and capital markets, support overseas stock listings and complete the crackdown on big tick. This saw the Hang Seng China enterprise index rally 12 and a half percent on Wednesday, following two days of 67% declines, finishing the week 4% Higher. Closer to home, we had Australian Labor force data for February. It was a bumper print with employment increasing by 77.4 1000 versus consensus of just 40,000 with full time appointments rising 120,000 offsetting a weaker part time creation of minus 44,000. The unemployment rate fell two tenths to 4%. The lowest level since 2008. Further labor supply also surprised to the upside with participation up to 10 at 66.4%. And new all time high economic strength so the Australian dollar rally against the US dollar breaking through the key 200 day moving average to finish the week at point 7415 cents. This data will provide the RBA with confidence that wage growth is set to accelerate, which they outlined is one of their key pieces of data to see before hiking rates. And equity news unity group confirmed recent media speculation that they had entered into exclusive discussions with Morrison and CO to sell their business. The preliminary cash consideration of photos 50 represents a 12% premium to the latest close price and 42.8% premium to previous days close. shares of stock attainment fell as much as 7% on Friday before closing the day down 3.6%. After evidence of inquiry centered around anti money laundering breaches at the Sydney casino raise concerns the site’s gaming license may be taken away. Finally and stop news advocates Group announced a fully underwritten $200 million capital raise at a price of $3.56 which represents a 5.1% discount to the last close price. The proceeds will be used to fund this storage development pipeline and replenish capacity to make investments. In the week ahead, we’ll continue monitoring developments around geopolitics and the ensuing implications for markets. It’s a quite a week On the data front. But we’ll be looking at UK CPI to gauge the impact from high energy prices with a market expects of print of 6%. We’ll also be looking at New Zealand credit card spending to get a read on the consumer. Thanks for listening. We’ll see you again next week.