Overview

Brought to you this week by Di Zhu, Analyst Portfolio Risk and Analytics

Concerns around the new Omicron variant resumed last week with the US recording its first cases, developed markets sold off further and the MSCI All Country Index (ACWI) was 1.17% lower for the week in local terms. Volatile trading sessions followed comments made by Moderna’s chief executive, who predicted that existing vaccines would struggle against the new variant and that it could be months before a new jab could be produced at scale. On the contrary, Pfizer expects their own vaccine to hold up against Omicron as additional data begins to arrive over the next two to three weeks. Globally, Energy and Utilities were the only sectors to have posted gains, Communications and Consumer Discretionary were the worst performers.

US Federal Reserve Chair Jerome Powell continued to shift away from the word ‘transitory’ when it comes to inflation. He acknowledged in a testimony before Congress that current inflation had become broad and sustained enough that the central bank may now consider speeding up the pace of tapering of asset purchases. Understandably this gave the market a mini Vietnam flashback of the Taper Tantrum, and market participants are now eyeing earlier than expected rate hikes also, resulting in a flattening of the yield curve and growth companies (which rely heavily on expected future earnings) to sell off. Friday’s US non-farm payroll also disappointed, adding just 210k of the 550k expected jobs, unemployment rate on the other hand fared better than anticipated, coming in at 4.2% vs the 4.5 consensus. 

Equity markets

  Developed markets
(MSCI World, USD)
Emerging markets
(MSCI EM, USD)
US
(S&P 500, USD)
NZ
(S&P/NZX50, NZD)
Index level 3,086 1,225 4,538 12,677
Weekly change -1.5%↓ 0.1%↑ -1.2%↓ 0.4%↑
Month to date change -0.5%↓ 1.0%↑ -0.6%↓ -0.3%↓
Year to date change 14.7%↑ -5.2%↓ 20.8%↑ -3.2%↓

Bond Markets

    US NZ
2-yr bonds Yield 0.59% 1.85%
Weekly change 9bp↑ 8bp↑
Month-to-date change 2bp↑ 10bp↑
Year-to-date change 47bp↑ 161bp↑
10-yr bonds Yield 1.34% 2.38%
Weekly change -13bp↓ -12bp↓
Month-to-date change -10bp↓ -9bp↓
Year-to-date change 43bp↑ 140bp↑

'bp' = basis point

When interest rates fall, bond prices generally go up. A decrease in interest rates is usually a good thing, and vice versa.

Currencies

  Level Weekly change Month-to-date change Year-to-date change
NZDUSD 0.6772 -0.7% -0.6% -5.8%↓
NZDAUD 0.9654 0.8%↑ 0.7%↑ 3.4%↑
USDJPY 112.80 -0.5%↓ -0.3%↓ 9.2%↑
EURUSD 1.1315 0.0%↓ 0.0%↑ -7.4%↓

Commodities

  Price (USD) Weekly Change MTD Change YTD Change
WTI Oil
(NYM Active Futures, per barrel)
$66.26 -2.8%↓ 0.1%↑ 39.5%↑
Copper
(CMX Active Futures, per pound)
$4.27 -0.6%↓ -0.3%↓ 21.2%↑
Gold
(Spot, per ounce)
$1,783.29 -1.1%↑ 0.5%↑ -5.9%↓

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