ClearWater Market Commentary as of March 25th, 2022

Here is the ClearWater Market Commentary as of March 25th, 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	0.71%
1 Month	4.26%
YTD	3.69%
1 Year	17.35%

^{As of 2022/03/25 – Source: www.marketwatch.com}

Index Performances	Last 5 Days	YTD
WTI Crude (oil)	9.30%	49.90%
Nasdaq	2.00%	-9.30%
Nikkei 225	1.33%	-9.09%
S&P/TSX Composite	0.71%	3.66%
S&P 500	0.52%	-6.20%
FTSE 100	0.10%	–2.58%
Russell 2000	0.02%	-8.02%
Dow Jones Industrial	-0.70%	-5.35%
Shanghai Composite	-1.20%	-11.63%
DAX	-2.34%	-14.18%
CAC 40	-2.59%	-12.69%
Hang Seng Index	-7.52%	-10.13%

^{As of 2022/03/25 – Source: www.marketwatch.com}

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

US economy (S&P 500 0.52%):

• The major benchmarks ended mostly higher, with the large-cap S&P 500 Index reaching its highest level since February 10 on Friday.
• Information technology stocks outperformed, helped by gains in Apple following news of analyst expectations for strong sales of the iPhone 13.
• A continued rise in many commodity prices boosted the energy and materials sectors.
• Worries about an increasingly hawkish turn by the Federal Reserve seemed to weigh on equity sentiment early in the week while prompting a sell-off in the bond market. On Monday, Fed Chair Jerome Powell repeated in a speech to the National Association for Business Economics that the central bank could deliver rate increases of larger than 25 basis points (0.25 percentage points) at future meetings if policymakers deem it necessary to control inflation.
• Developments in Russia’s war against Ukraine also remained on investors’ radars. Heavy fighting continued north of Kyiv, and Ukrainian officials rejected a Russian demand that their forces in Mariupol surrender.
• The week’s economic data had a mixed and arguably puzzling tone, with some data seeming to improve since the Russian invasion. Durable good sales, housing sales and such declined. However, manufacturing activity rose much more than expected in March (high since July 2021). Weekly jobless claims also fell more than expected.

Canadian markets (S&P/TSX 0.71%):

• Further gains in the energy sector powered Canada’s main stock index higher for a fifth straight week and raised the loonie to almost 80 cents.
• The energy sector gained 2.8 percent as an attack on a Saudi oil depot caused crude prices to reverse from early losses when there were concerns that EU sanctions on Russian oil weren’t as strong as some wanted.
• The May crude oil contract climbed US$1.56 to US$113.90 per barrel and the May natural gas contract was up 16.5 cents at US$5.61 per mmBTU.
• The Canadian dollar rose to its highest level in two months, trading for 79.99 cents US after moving above 80 cents earlier in the day.

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

European and Asian economies:

• Shares in Europe weakened amid the ongoing Russian invasion of Ukraine and the prospect of tighter monetary policy.
• Western countries agreed at several summits to provide more military support for Ukraine, reinforce troops on European borders, and extend sanctions on Russian institutions, companies, and individuals. The economic measures included preventing the Russian central bank from selling its gold reserves to bolster the currency and pay for the invasion of Ukraine.
• European Union (EU) leaders focused on tightening existing sanctions and cracking down on evasion but stopped short of imposing additional curbs on Russian energy imports. The U.S. agreed to supply the EU with an additional 15 billion cubic meters of liquified natural gas this year, with the aim of reducing the bloc’s dependence on Russia.
• Eurozone business activity appeared to slow in March, as costs and prices charged rose at record rates on soaring commodity prices and supply chain delays due to the Ukraine conflict.
• UK inflation hit a 30-year high in February, putting pressure on the Bank of England to continue raising interest rates. The consumer price index rose at an annual rate of 6.2%—exceeding the median forecast of 6%.
• Japan’s stock markets rose over the week, as sentiment was boosted by expectations of further economic stimulus and reassurances from the Bank of Japan (BoJ) that it will maintain very accommodative monetary policies.
• Amid growing pressure on Prime Minister Fumio Kishida to act to cushion the impact of rising fuel and commodity prices on households and firms, the government is set to announce an additional package of measures to boost the economy.
• Flash purchasing managers’ index data showed that Japan’s private sector activity fell in March. Against the backdrop of easing coronavirus restrictions and downward trending COVID-19 cases, the decline was only marginal, however.
• Chinese markets fell amid delisting fears for U.S.-listed Chinese companies arising from a simmering bilateral dispute over auditing standards.
• Concerns about the fate of dual-listed Chinese stocks continued to dampen sentiment. Chinese regulators instructed some of the country’s U.S.-listed companies to prepare audit documents for the 2021 financial year. The companies reportedly included China’s top search engine Baidu, e-commerce platforms Alibaba and JD.com, and social media company Weibo. News of the Chinese regulators’ instruction to dual-listed companies appeared to signal some willingness by Beijing to capitulate to Washington’s demands to resolve a longstanding standoff over auditing standards.
• However, analysts noted that it remained unclear if the talks between regulators on both sides would materialize into anything concrete. The uncertainty was underscored Thursday when the U.S. audit watchdog said that it was still meeting with its Chinese counterparts and called speculation about an agreement “premature.” In a statement, the Public Company Accounting Oversight Board added that it “remains unclear” whether China would permit U.S. regulators to review the audits of U.S.-listed Chinese companies.
• For years, the U.S. has demanded access to the books of U.S.-listed companies, but Beijing has refused to give access to corporate audits citing national security reasons. Earlier in March, the U.S. Securities and Exchange Commission (SEC) named five Chinese companies that could face delisting under the Holding Foreign Companies Accountable Act, a law that compels the SEC to delist stocks of companies if U.S. regulators can’t review their audits for three straight years.
• Reports of a worsening coronavirus outbreak across the mainland also depressed risk appetite. China counted more than 56,000 cases nationwide since March 1st.

What to watch this week:

• Canada and UK GDP data
• US personal income and spending data
• US and Japan employment data
• Japan retail sales and industrial production data
• Eurozone consumer confidence and inflation data
• OPEC+ meeting
• Global Purchasing Manager Indices

• 

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

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