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Below are Views On Daily Global Market Update 05 January 2022 By Asheesh Chanda, Kristal.AI

Onward and Upward

Equities, particularly in Europe and Asia, saw notable gains on the day with all markets open once again in the new year now. SPX closed marginally lower on the day, with Tech names seeing some weakness. The Nasdaq fell over a percentage point and the decline was quickly attributed to growth concerns and higher discount rates (a consequence of hawkish central banks) impacting valuations. There may be some truth to the valuations part - the top 10 names in the now Tech dominated SPX are trading at PE multiples comparable to the top 10 names at the peak of the dot com bubble. Gains in the session were led by the Energy sector and Automakers like Ford and GM. Ford rallied strongly into the release of its sales figures today and GM saw gains despite being overtaken by Toyota as the largest carmaker in the US by volume - first time since 1931.

The US yield curve continued to steepen and the inflation narrative seems firmly in place for the new year as well. The 10Y pushed higher to 1.65% now with the 30Y comfortably above the 2% mark. Turkey remains the outlier here as Erdogan took to threatening protestors while keeping the central bank dovish after inflation accelerated to 36% in December. Other operational measures have been put in place to deter speculators but its unlikely to be sustainable as hard currency reserves run low. And speaking of hard reserves, Sri Lanka is expected to make a decision soon on whether it will be requesting a loan from the IMF - the govt is reportedly split on the matter. While an IMF restructuring will allow them to easily pay their dues on 18 Jan, it will come with fiscal conditions that they are looking to avoid.

Commodities and Crypto were in the green for the session too, with Natural Gas the only outlier. Easing of tensions on Ukraine ahead of formal talks next week seem to be helping the matter. The US economy reported record resignations in November last year amid record high job openings as well. The Biden administration is pushing the vaccine mandate hard as cases top 1 million in the country. Ahead today, we have the notoriously volatile ADP jobs number (ahead of NFP on Friday) and weekly crude inventories as well.”

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