Last week was a short week but yet eventful with various interest rate hike announcements from various central banks around the world. As mentioned last week, the rising US dollar had hit its nearly 2 years high and this can be tracked back from the U.S. dollar index (USDX) which measure the value of the U.S. dollar relative to a basket of foreign currencies (that include the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc), to observe the rising trend of USD is really making a return.
Hence, investors need to know the logic behind the increase of interest rate will eventually cause the flow of money head back to the central banks, as the consumers and businesses need to pay more for borrowing money now, and in order to lower the borrowing cost of money that previously almost charged at zero... equity (e.g. Stock, Unit Trust, Bonds) will definitely a place that investors can quickly encash within a short period of time by selling the assets away. Therefore, the selling off in market last week, is not something unusual but rather with the current all-time high inflation under the slow or in fact stagnant economic growth, should have already push the world into stagflation.
As such, the selling off may be still far from over, as the US Federal Reserve had warned for more 50-point hikes to come though the 75 basis-point rise is “not something that the committee is actively considering" commented by the Fed Chair Powell last Wednesday.
I had tabulated the last week rate hikes in the following table. Investors need to take note of the rate hikes that should not be treated as a self-contained issue that affect only the United States, but rather it has become a global trend that countries need to follow suit to dodge away from the situation where money leaving for other countries that give out higher returns.
Country | Previous | Now |
|---|---|---|
Australia | Reserve Bank of Australia | 0.10%Raise interest rates by 25 basis points to 0.35% |
Unit State | Federal Reserve | 0.50%Raise interest rates by 50 basis points to a range of 0.75 - 1.0% |
British | Bank of England | 0.50%Raise interest rates by 50 basis points to a range of 0.75 - 1.0% |
India | Reserve Bank of India | 4%Raise interest rates by 40 basis points to 4.4% |
Hong Kong | Hong Kong Monetary Authority | 0.75%Raised interest rate by 50 basis points to 1.25% |
Reference:
Fed raises interest rates by 0.50%, largest move since 2000
The Federal Reserve is expected to raise interest rates by half a percentage point this afternoon, as the central bank's firefight with high inflation continues.
Other Focus:
(News-Abounding Week)
China-Backed John Lee chosen Hong Kong Leader in uncontested vote
Keppel O&M awarded FPSO integration contracts worth $250 mil
Grand Venture Technology reports net profit after tax of $3.6 mil, up 8.9%
F&N reports 17.9% lower earnings of $68.5 mil on higher raw material and energy costs
First Reit posts 1.5% rise in Q1 2022 DPU to 0.66 Singapore cents
Far East Orchard back in the black with Q1 net profit of S$2.6m
Dairy Farm International changes name to DFI Retail Group Holdings
New Sembcorp solar farm can power 4,700 4-room HDB flats
China EV maker Nio wins nod for secondary listing on SGX
Aims Apac Reit in 'exclusive due diligence' to acquire Sydney office property
NYSE owner ICE profit rises on high trading volume
Keong Hong warns of expected H1 net loss, blames virus-related business conditions
Shell posts record profit on high energy prices and trading boost
BMW profit beats estimates on strong demand for top-end cars
Lendlease Reit posts 99.9% occupancy; 313@somerset tenant sales close to 2020 levels
Sembcorp bags S$1.2 billion green loan for corporate needs, sustainability projects
F&N issues $140 mil worth of notes with 3% p.a. coupon
Keppel O&M signs agreements worth $135 mil for utilisation of two jackup rigs
ABSD of 35% to apply on transfer of residential property into a living trust
Ascendas REIT to acquire seven logistics properties in Chicago for $133.2 mil
Riverstone Holdings reports earnings of RM108.7 mil for the 1QFY2022, down 79.2%
Keppel DC REIT prices $109.9 mil worth of 2.61% notes due 2028
Coming Focus:
Sunday, May 8, 2022 | |
USD | FOMC Member Speaks |
CNY | Trade Balance (USD) |
Monday, May 9, 2022 | |
Holiday | Hong Kong, National Day |
SGD | Foreign Reserves USD (MoM) |
USD | FOMC Member Speaks |
Tuesday, May 10, 2022 | |
USD | FOMC Members Speak |
USD | Fed Member Speaks |
USD | EIA Short-Term Energy Outlook |
CNY | CPI / PPI |
Wednesday, May 11, 2022 | |
USD | Core CPI |
USD | Crude Oil Inventories |
USD | Federal Budget Balance |
Thursday, May 12, 2022 | |
USD | OPEC Monthly Report |
USD | Core PPI / PPI |
USD | Initial Jobless Claims |
USD | FOMC Members Speak |
Friday, May 13, 2022 | |
USD | Export Price Index |
USD | Import Price Index |
USD | Michigan Consumer Expectations |
USD | FOMC Members Speak |
News on Blockchain, NFTs and the Metaverse
When the interest rate is on the rise, not only stock market, unit trusts, bonds.... but the hot favourite, cryptocurrencies, are also not spared from the panic selling. Last week, bitcoin had ever jumped to $40,000 after Fed chair Powell ruled out of any bigger rate hikes. However, the good news was short-lived, and bitcoin is now hanging around at $30,000 psychological level, leaving the investors in fear of any possibility of further downside
As such, investors must note that the bitcoin, ether and digital assets are like any other assets, it doesn't isolate investors from the fragile global economies, given the fact that digital asset and traditional market correlations remain significant.
Reference:
Bitcoin’s price is now 50% down from its peak as the crypto plunge continues Bitcoin and other cryptocurrencies continued their tumble on Monday after a harsh weekend led to the lowest prices seen so far this year.
What to/not to invest this month (May 2022) :)
Markets had been performed badly for the past few days since the Federal Reserves had made the rate hike official in the FOMC meeting last week. In my past Market Update issue, I had mentioned several times about the month of May could probably a tough month for investors to ride through because 50 basis point is indeed too much for the market to digest and re-strategize portfolios will not be a option this time. Hence, a mass selling and buying should be expected for this quarter.
My call is be a short-term trader for this month. If it's happen that you bought any stock cheap enough, no harm to take profit if price rebounded. The volatility will always be there for you to get in and out of market. Else spread your buying over this quarter, no need to load up one shot in this volatile market.
Earning announcements continue...
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