Market Analysis—Sep 2022

In September, global stock market continued to slide given the concern of faster tightening trajectory of central banks amidst sustaining high inflation and slowing global demand. SP500 slumped by 9.3% to 3586. DAX dropped by 5.6% to 12114. Hongkong market underperformed as HSI went down by 13.7% to 17223. A share weakened as well despite government continued to launch growth supportive policies. SHCOMP declined by 5.6% to 3024. Commodity weakness continued in September. Copper price went down by 3.1% to $7560. Aluminum price slumped by 8.4% to $2162. Gold price declined by 2.9% to $1661. Oil price continued to underperform, plummeted by 11.2% to $79.5.

Global economy continued to suffer from weaker demand and rising borrowing cost. Global PMI declined to 49.8 from 50.3. By regions, US PMI resumed downturn and dropped to 50.9 from 52.8. Eurozone PMI contracted further to 48.4 from 49.6. China PMI slightly rebounded to 50.1 from 49.4 thanks to the mild production recovery. On the other hand, inflation sustained at high level in US and Europe. CPI moderated to 8.3% from 8.5% in US while stayed flattish at 9.1% in Europe. Federal reserve raised interest rate by another 75bps in September due to the stickiness of core inflation. Latest dot plot showed a median projection of another 125bp rate hike this year and 25bp next year, indicating a greater willingness to keep hiking if inflation remains high. ECB also raised benchmark rate by 75bps in order to ease pressure from supply chain disruptions. Dollar continued to gain given its relative strength over other regions.

For the outlook of October, market will remain volatile given the worldwide tightening monetary policies. Country wise, China economy is still consolidating at low level. All eye on its 20th Party Congress and subsequent policy announcements in late October. US economy should remain resilient thanks to the solid job market. Europe economy will continue to struggle amidst stag-inflation environment.