Market Monitor - 25 March 2022
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Market Monitor – 25 March 2022

Global stock markets have enjoyed a more or less positive week as investors have once again been happy to focus on whatever good news they can find. Despite the ongoing war in Ukraine – a conflict which is showing increasing signs of disrupting international trade and adding to inflationary pressures around the world – share prices in the UK, United States and the Far East have moved higher, although there remains a high level of volatility in the system.
The week started in uncertain fashion with rising oil prices again adding to investors’ nervousness. However, an upbeat economic outlook from US Federal Reserve chair Jerome Powell on 12 March1 helped to calm fears and drive markets higher earlier in the week. Investors have come to terms with the likelihood of further interest rate increases this year, and rising yields have helped to bolster financial stocks on both sides of the Atlantic.
On Thursday, the Moscow stock exchange opened for business for the first time since Vladimir Putin decided to invade Ukraine a month ago. Trading was suspended at the start of the conflict over fears of a rush to the exits as a result of Western sanctions on the Russian economy. Strict rules limiting the number of shares available to trade and prohibiting foreign entities from selling their stocks meant that the reopening did not lead to an immediate crash.

The US

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.1% down for the week so far, with the S&P 500 moving ahead 1.3%. Economic data in the US continues to offer encouragement, with business activity rising to an eight-month high in March – but confidence has fallen as a result of concerns about rising input costs and falling levels of disposable income among consumers.

The UK & Europe

In the UK, the FTSE 100 closed on Thursday 0.8% up for the week, with the index benefiting once more from rising energy and commodity prices. Fuel retailers also welcomed the government’s decision to reduce tax on petrol and diesel in response to soaring forecourt costs.

Official figures showed that inflation in Britain hit 6.2% in February, its highest level in 30 years. Most analysts expect the rate to rise even further in the coming months and a number of retailers have said they have no choice but to raise prices.

In Frankfurt, the DAX index ended Thursday’s session down 1% for the week, as did France’s CAC 40. Firms in the eurozone are concerned that an extension of sanctions on Russian gas and oil could see their energy costs rise sharply. Indeed, business confidence in the single currency area has fallen to its lowest level in 18 months, while the outlook for the manufacturing sector measured by the purchasing managers index (PMI) dipped to its lowest point since the start of 2021.

Asia

In Asia, the Hang Seng index in Hong Kong rose 2.5%, extending the rebound which started last week. Shares in ecommerce giant Alibaba soared 11% on Tuesday after the firm announced an expansion of its share buyback programme, while China’s property developers have also shown encouraging signs of recovering lost ground.

In Tokyo, Japan’s Nikkei 225 index of leading shares had gained almost 5% by Thursday’s close, clawing back a large chunk of the losses incurred since the start of 2022. The strengthening dollar provided a major boost to the large number of Japanese companies which derive earnings from international markets.

March 18
March 24
Change (%)
FTSE 100
7404.7
7467.4
0.8
FTSE All-share
4135.4
4155.9
0.5
S&P 500
4463.1
4520.2
1.3
Dow Jones
34754.9
34707.9
-0.1
DAX
14413.1
14273.8
-1.0
CAC 40
6620.2
6555.8
-1.0
ACWI
701.5
708.8
1.0
Hong Kong Hang Seng
21412.4
21946.0
2.5
Nikkei 225
26827.4
28110.4
4.8

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, as at 24 March 2022.

25 March 2022
Mark King
Mark King
Head of Investment Content
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Market Monitor – 25 March 2022

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