ClearWater Market Commentary as of March 11th, 2022

Here is the ClearWater Market Commentary as of March 11th, 2022:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

S&P/TSX Composite Index
5 Day	0.51%
1 Month	-0.40%
YTD	1.13%
1 Year	13.85%

^{As of 2022/03/11 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
CAC 40	28.00%	-11.12%
DAX	8.51%	-12.33%
FTSE 100	3.04%	-2.89%
Russell 2000	1.58%	-11.72%
S&P/TSX Composite	0.51%	0.98%
Nikkei 225	0.34%	-12.10%
Nasdaq	0.10%	-17.90%
S&P 500	0.08%	-11.79%
Dow Jones Industrial	0.00%	-9.34%
Shanghai Composite	-4.43%	-11.44%
WTI Crude (oil)	-5.60%	45.10%
Hang Seng Index	-7.25%	-16.52%

^{As of 2022/03/11 – Source: www.marketwatch.com}

Last week’s and next week’s key economic events:

US economy (S&P 500 -1.27%):

• Stocks moved lower over another week of extreme volatility provoked by the Russian invasion of Ukraine. The Nasdaq Composite fell to a level that was nearly 22% below its recent peak, more than the 20% threshold that technically defines a bear market.
• The S&P 500 Index was roughly 14% off its high, still in correction territory.
• A surge in commodity prices as a result of the Russian-Ukrainian conflict seemed to dominate sentiment during the week. Oil prices reached USD 139 per barrel—a 14-year high—in international markets on Monday.
• On Tuesday, President Joe Biden announced that the U.S. was cutting off all imports of Russian oil and gas and told Americans to be prepared for higher gas prices. European nations, which are much more reliant on Russian energy imports, announced less stringent measures.
• Oil prices fell back some at midweek after a United Arab Emirates official stated that the country was willing to increase production substantially, although the country’s energy minister later said it would stick with existing OPEC production plans.
• Turmoil in the market for nickel, a component of stainless steel and other alloys, also seemed to worry investors. Russia’s threat to ban nickel exports—it supplies over 9% of the world’s supply—caused prices to double before trading was halted on the London Metal Exchange.
• The unprecedented rise threatened the ability of the world’s largest producer, China’s Tsingshan Holding Group, to meet margin calls on its short positions. Some better news came in the grains market, as shipping resumed in the Black Sea. Trading in wheat futures on the Chicago Mercantile Exchange was halted after a report that global stockpiles would remain substantial even after the cut-off of exports from Russia and Ukraine.
• Much of the week’s economic data came in roughly in line with expectations. Weekly jobless claims came in slightly above expectations, at 227,000, but remained at low levels.

Canadian markets (S&P/TSX 1.40%):

• Canada’s main stock index fell on Friday despite a strong jobs report in February but still ended higher for a third straight week as the Ukraine war continued to spawn volatility and push oil prices higher.
• Real estate was the best performing sector on the day while energy edged higher as crude prices continued to rise. 
• The Canadian dollar traded for 78.62 cents US compared with 78.27 cents US on Thursday.  
• Canadian employment (Feb.) shattered expectations (336,600 versus127,500 expected), after the prior month’s 200,100 declines. The unemployment rate fell a full percentage point to 5.5%, while the participation rate jumped to 65.4% (from 65.0%).
• The Canada National Balance Sheet (Q4) showed household debt-to-disposable income climb to 186.2% (from 180.4%), a new record high.
• Net worth as a percentage of disposable income rose to 1,073% (from1,034.9%), while gross general government debt to GDP fell to 132.9%(from 134.2%).

Performance 2021: S&P 500/400/600 Sectors

European and Asian economies:

• Shares in Europe rebounded in a volatile week of trading, perhaps reflecting hopes that a diplomatic solution to the Russia-Ukraine conflict might emerge.
• The EU also shut down its airspace to Russia, tightened export controls on high-end technology, and took steps aiming to freeze some assets of Russian President Vladimir Putin and Foreign Minister Sergei Lavrov, among others.
• The ECB indicated that inflation expectations appeared to be driven higher by the Russia-Ukraine conflict and announced that it could end its asset purchase program in the third quarter, rather than at the end of the year.
• The bank also said it could revise the schedule to reflect how the macroeconomic situation evolves. Regarding the timing of a rate increase, ECB President Christine Lagarde stressed that the ECB would be “data-dependent,” acknowledging that a move could happen a week or several months after the central bank stops bond purchases.
• The UK said it would stop importing Russian oil and gas by the end of 2022, supporting a similar move by the U.S. The European Union, however, unveiled a plan to cut Russian gas imports by two-thirds within a year, while Germany rejected a blockade.
• Chancellor Olaf Scholz said he preferred to apply “sustainable” pressure on Moscow that would not impose too big a cost on German consumers. Russia threatened to close its main gas pipeline to Germany in retaliation against a Western embargo.
• Meanwhile, the exodus of European companies from Russia continued. Supermarkets in the UK also began pulling Russian products from their shelves.
• Japan’s stock markets lost ground over the week, as uncertainty about the Russia-Ukraine situation continued to dent risk appetite, global commodity prices soared, and many central banks continued to shift toward a more hawkish stance.
• Japan’s economic growth in the fourth quarter of 2021 was downgraded to an annualized 4.6%, from 5.4%, on a smaller rise in private demand. Nevertheless, it marked a return to growth for the economy following a contraction in the previous three-month period.
• The government announced that it will freeze the assets in Japan of three Belarusian banks, due to Belarus’ involvement in Russia’s invasion of Ukraine. It has already taken similar measures against several Russian banks and individuals, closely coordinating its response with the U.S. and European countries.
• Export controls on semiconductors and telecommunication equipment to Russia and Belarus will also be toughened. Several large Japanese companies have suspended their operations in Russia, joining other global companies in scaling back their businesses as the invasion continues.
• Chinese markets recorded a weekly loss amid a resurgence in COVID-19 outbreaks and the war in Ukraine, which pressured prices for industrial metals and agricultural commodities.
• Last week, the U.S. Securities and Exchange Commission (SEC) identified five Chinese companies that could be subject to delisting from U.S. exchanges if they fail to comply with audit requirements. The SEC has demanded complete access to the books of U.S.-listed Chinese companies, but Beijing has blocked domestic companies and their local accounting firms from complying with requests from foreign regulators.
• The dispute over auditing has placed U.S.-listed shares worth hundreds of billions of dollars at stake. Yum China Holdings, the owner of the KFC, Taco Bell, and Pizza Hut chains in China, said it may have to delist from the New York Stock Exchange by 2024 after the SEC’s notice, which sets a three-year deadline for Chinese companies to comply.
• At the weeklong annual gathering of the National People’s Congress, the Communist Party-controlled parliament, Beijing set a goal for gross domestic product to expand “about 5.5%.”

What to watch this week:

• US and UK monetary policy announcement
• Canadian, Eurozone, and Japanese inflation data
• Canadian and US housing data
• Canada, US, and China retail sales data
• UK employment data
• China fixed-asset investment data
• US, Chinese, and Japanese industrial production data

• 

Sources: Bloomberg.com,Yardeni.com, Barron’s.com, Factset.com and Newyorkfed.org

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