Market update for the week of April 29, 2022

Global markets had a volatile week due to increasing concerns over the monetary policy changing toward tighter measure across central bank in major markets, accompany with negative US economic data in Q1 and mixed corporate earning result. Over the past 5 days ending Thursday, the 3 major equity indices in the US lost 2.3-2.52%. Mega tech companies’ earnings results were mixed, Google’s parent company Alphabet missed market estimates on revenue and profits; other big tech names fared better, the surprise user gain for Facebook sent the stock jumping over 17%; earnings for Apple also beat market estimates again, but the CEO noted that supply chain challenges remain present and warned that the company could see sales impact of up to 8 billion. As for the economy, The U.S. economy contracted by an annualized 1.4% in Q1, well short of consensus expectations for a 1.0% expansion. Next week, several key economic data will be released, including ISM manufacturing and services data, nonfarm payrolls and the Fed will also hold the May interest rate meeting, market is expecting a 50 bps hike, and a potential announcement on quantitative tightening, and market is pricing-in a 75bps hike in next fed meeting.

In terms of Hong Kong market, the Hang Seng Index rose 2.18% for the week of Apr 29, the Hang Seng Technology Index rose 11.76%, and the China Enterprises Index rose 4.68%. Hong Kong stock market showed a trend of bottoming out and rebounding: On Monday, the market was worried that the Federal Reserve would speed up its tightening of monetary policy, and the market fell across the board. In the following two days, some sectors and stocks have rebounded, but they have not changed the pattern of ground-breaking shocks. On Friday, the Political Bureau of the Central Committee of the Communist Party of China held a meeting and proposed to promote a healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision, and introduce specific measures to support healthy development of the platform economy in a standardize manner. Affected by this, Hong Kong stock technology stocks rose sharply, the Hang Seng Technology Index rose 9.96%, and the Hang Seng Index rose 4.01%. In addition, on the same day, Hong Kong Chief Executive candidate Li Jiachao announced his political platform, which also boosted the market to a certain extent.

In terms of major global asset prices, the yield on the 10-year U.S. Treasury bond rose 3.18% to close at 2.977%, 25 basis points lower than the yield on the two-year Treasury bond. The fear index VIX closed down 3.17%. WTI and Brent both rose 0.9%. Spot gold closed down 1.92% at $1,894 an ounce. The dollar index remained high, closing at 103.625.

Next week, Caixin China PMI Services will be released, and the Chinese market will be closed for the first half of the week due to Labour Day holidays.

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