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Below are Views On Daily Global Market Update 21 January 2022 By Asheesh Chanda, Kristal.AI

“SPX closes below 4500

More weakness in US equities as it bucked the trend of gains across Europe and dipped below the 4500 level into close. Only Utilities saw a marginal gain with the rest of the sectors in the red again. Only the Energy sector is up YTD (+14%) as the rest have come off hard from the year end rally - Tech, Consumer Discretionary and Real Estate are all down over 9%. Jeremy Grantham, the founder of asset manager GMO which usually has a 7 year investment horizon, says the bubble burst he called for last year has started now and sees declines of 50% ahead. How long and deep the current selloff goes, of course, remains anyone's guess. Earnings this quarter are struggling to match the lofty expectations with Netflix declining overnight on higher content spending and slower subscriber growth.

Govt debt yields fell back on the day and the US yield curve flattened in keeping with the risk off price action. The 10Y yield fell below the 1.8% level once again with the 2Y testing the 1% support. Crude came off multi year highs too with US inventory data coming in higher than expected overnight and the White House indicating they could accelerate the release of strategic reserves. Crypto weakness continued with Bitcoin testing the 40k level now and Ethereum testing the 3k level. Natural gas also continued to trade soft despite the likelihood of Russian military action in Ukraine rising by the day.

One bright spot in 2022so far  has been in China. HK equities are outperforming their peers after they were hit hard last year. Over in the mainland, real estate developers and their debt rallied too after rules were relaxed around how much of their pre-sales amount (in escrow) they can access and for what purpose. This is the latest in a slew of measures to help them improve their liquidity situation. There have also been rate cuts this year (including the one tied to mortgages) but whether that translates into higher lending from banks still remains to be seen.”

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