Markets Wrap up 13 May 2022

*US Markets in Detail...*

*SGX: 15,857: +41: +0.26%*

*IPO*

LIC … IPO px: Rs 949/-….(discount Rs. 12)

Dehlivery: IPO Px: Rs. 486/-

Prudent: IPO Px: Rs. 630/-

Venus: ipo PX: Rs. 326/-…last heard…46

Paradip Phosphates: 17 to 19 May…

Ethos : Date : 18 to 20, May 2022

Size : 375 Cr fresh + 11,08,037 OFS shares

EMudhra: 20th May to 24th May

*Today’s Major Results*: ALKEM, APLAPOLLO, BANDHANBNK, BANKBARODA, CARBORUNIV, CESC, EICHERMOT, EMAMILTD, ESCORTS, FLUOROCHEM, HAL, JKPAPER, NAZARA, RECLTD, RELINFRA, SAFARIND, SBIN, SHARDACROP, SIGACHI, TECHM, UCOBANK, UNIONBANK, etc.

*Provisional Cash Rs. In Crs. (12th May)*

FIIs: -5,256 (6,018 – 11,274)

DIIs: +4,816 (9,487 – 4,672)

*IPL T20 update:*

Yesterday: CSK (97) lost to MI (103/5) (T20 59 of 74)

Today: RCB vs PBKS (T20 60 of 74)

Sensex: 52,930 (-1,158) (-2.14%)

Nifty: 15,808 (-359) (-2.22%)

Dow: 31,730: +104: +0.33%

S&P: 3,930 (-5) (-0.13%)

Nas: 11,371: +7: +0.06%

Brazil: 105,688: +1,291: +1.24%

Ftse: 7,233 (-114) (-1.56%)

Dax: 13,740 (-89) (-0.64%)

Cac: 6,206 (-63) (-1.01%)

MOEX: 2,298 (-89) (-3.74%)

WTI Oil: $106.67: +0.51%

Brnt: $107.45

Gold: $1,822

Silver: $20.7 (-0.38%)

Copper: $409

Copper (LME): 9,340: +112: +1.21%

Zinc (LME): 3,669: +71: +1.97%

Alluminum (LME): 2,778: +25: +0.89%

Tin (LME): 35,772: +245: +0.69%

Eur-$: 1.0381

GBP-$: 1.2200

Jpy-$: 128.55

Re: 77.4238: +0.24%

USD = RUB: 64.3833 (-0.32%)

US10yr: 2.85%

GIND10YR: 7.244: +0.40%

$ Index: 104.8510: +0.97%

US Vix: 31.77 (-2.43%)

India Vix: 24.26: +6.41%

BalticDry: 3,052: +113: +3.84%

*ADR/GDR*

Cogni: +1.6%

Infy: +0.62%

Wit: +3.49%

IciciBk (-1.65%)

HdfcBk (-0.61%)

DrRdy: +1.27%

TataMo (-1.39%)

TatSt (-4.62%)

Axis (-1.97%)

SBI (-2.29%)

RIGD (-1.74%)

INDA (-0.47%) (IShares MSCI INDIA ETF)

INDY (-0.12%) (IShares MSCI INDIA 50 ETF)

EPI: +0.03% (Wisdom Tree India Earning)

PIN (-0.77%) (Invesco India Etf)

*Dow, S&P 500 finish off day’s lows after Powell is confirmed for second term as Fed chair: Powell gets another term of 4 years to tackle inflation*

*The Dow Jones Industrial Average fell for a sixth straight day Thursday, as traders failed once again to find their footing in an increasingly volatile market. Stocks rebounded sharply in the final hour of New York trading, with the S&P 500 almost wiping out a selloff that pushed it to the brink of a bear market earlier Thursday. At one point, the Dow was up as much as 80 points at session highs, while the Nasdaq added 1.61%. At session lows, the Dow fell more than 500 points, while the Nasdaq dipped 2.25%.*

*U.S. stocks ended a whipsaw session (but were off the session’s ugliest levels) slightly lower on Thursday, as investors juggled signs of peaking inflation with fears that it could remain elevated, prompting ever more aggressive tightening from the Federal Reserve.*

All three major U.S. stock indexes seesawed and the S&P 500 came within striking distance of confirming it entered a bear market after swooning from its all-time high reached on Jan. 3.

The indexes have gyrated wildly in recent sessions, often reversing initial rallies or sell-offs by the closing bell.

These wild swings of upwards of 2% up or down are extremely rare, and showcase a very fragile investor psyche for that amount of volatility to happen in such a short time frame. Continued concerns over inflation, which looks like it has peaked yet is staying stubbornly high, continues to concern investors, pushing the S&P to the brink of a bear market.

*U.S. stocks closed lower Thursday, but were off the session’s ugliest levels, after Federal Reserve Chairman Jerome Powell was voted in by Congress to serve a second term of four years.*

*Before Powell’s confirmation, the S&P 500 had been veering close to bear-market territory.*

*The move "was widely expected and it opens the door for the Fed to continue to battle the 40-year inflation highs, with many more interest rate hikes likely coming this year*

The Dow Jones Industrial Average fell 103.81 points, or 0.3%, to end at 31,730.30, about 500 points off the session’s low, but extending its losses to a sixth day in a row.

*Volume on U.S. exchanges was 16.17 billion shares, compared with the 13.03 billion average over the last 20 trading days.*

On Wednesday, the Dow Jones Industrial Average fell 327 points, or 1.02%, to 31,834, the S&P 500 declined 66 points, or 1.65%, to 3,935, and the Nasdaq Composite dropped 373 points, or 3.18%, to 11,364.

*The S&P 500 has dropped 18.1% from its record high set on Jan. 3. A close at or below 3,837.249 would put the large-cap benchmark into a bear market — defined as a drop of 20% from a recent peak.*

*What drove markets*

*Stocks pared losses in choppy trade Thursday after Federal Reserve Chairman Jerome Powell was given more time to dramatically pull back the central bank’s easy-money stance to battle inflation before it wrecks the economy.*

*The Senate voted to confirm Jerome Powell for a second four-year term as Fed chairman on Thursday, trusting him to tackle the highest inflation to confront the country in decades. The Fed began raising interest rates in March and says it will keep going until price pressures cool, seeking a soft landing that doesn’t crash the economy. But critics doubt the central bank can avoid a recession as it tightens monetary policy that had been eased dramatically during the pandemic.*

*The turnaround came as Federal Reserve Bank of San Francisco President Mary Daly told Bloomberg News that a 75-basis-point increase in rates is “not a primary consideration,” while adding that the US is in a strong place and should be able to withstand monetary tightening. For a market that’s been haunted by fears that restrictive policy could cause a recession, those comments offered a degree of comfort at the end of a day marked by brutal volatility.*

*The caution born from rising rates held firm on Thursday as data showed prices paid to US producers rose more than forecast in April, reinforcing bets the Fed will further tighten policy. Treasuries rose with the dollar as investors sought haven assets. The euro tumbled, the Swiss franc weakened to reach parity with the dollar for first time since 2019 and Hong Kong’s Monetary Authority intervened to defend its currency peg. The Japanese yen -- a traditional haven that, in an ironic twist, has not acted in that role so much of late -- rallied.*

*Equities initially rallied following fresh economic data that showed slowing wholesale inflation in April, but swung lower in afternoon trade as investors focused on the potential ramifications of still intense price pressures. While meeting forecasts, prices rose 0.5% in April, from a 1.6% jump in March. Price gains over the year slowed to 11% from 11.5%.*

*At the session’s worst levels, the S&P 500 index traded precariously close to a bear market for the first time since 2020.*

“The market is reacting to inflation data that feeds into what the Fed is going to do,” said James Ragan, director of Wealth Management Research at DA Davidson & Co., by phone. “There’s definitely a bearish economic opinion forming that there is a possibility of a looming recession.”

While DA Davidson’s own house view has been a “bit more optimistic,” given the strong labor market, Ragan said a real concern is that households cut back on spending. “Inflation is a scary thing,” he said. “If everybody pulls back a little bit, it could drag down the economy.”

Inflation data released Wednesday may have shown a peak in price growth, but the figures were hotter than forecast. Core CPI, which excludes energy and food and tends to be a better predictor of future inflation, surprisingly accelerated in April.

At least it’s peaked, for now,” said Eric Lynch, managing director at Scharf Investments, about the inflation readings. “The question is do we go to 4% relatively quickly or 6%?” he said by phone.

He also said it “matters a lot where we land,” particularly as higher grocery bills, elevated gas prices and soaring rents translate to stretched paychecks. “It’s probably safe to say we’re not getting to 4% too quickly.”

*Fed Chair Powell has made fighting hot inflation a key focus in the past six months, including by outlining the central bank’s plans to quickly raise rates and to start shrinking its near $9 trillion balance sheet. He has said it’s possible to tighten financial conditions without derailing the economy.*

*On the labor front, weekly jobless claims rose 1,000 to 203,000 in the week ended May 7, the Labor Department reported.*

*Lynch called current market pressures the “other side of the slope,” or a reversal of when Main Street was collapsing early in the pandemic but Wall Street was rising. “I think there’s a lot of concern about earnings and a recession as interest rates rise.”*

Everyone wants energy and food and labor costs to all come down, but at the same time, our mechanism for doing that is to increase interest rates,” said Aviva Investors’ Susan Schmidt. “You’re working at countermeasures and it’s worrisome for investors because they’re trying to figure out how this impacts business overall and that’s why I think you’ve seen such whipsaw action in the major indices.”

“Even if you say we’re in a bear market, there’s rallies within bear markets that can be very sharp,” said Truist’s Keith Lerner about the early market moves. “I think, at least short-term, and given how oversold we are and given that we’re starting to see people nibble at some of these areas that have been the most beaten up, I think that’s at least a silver lining in a sea of red and gloom over the last couple of days.”

*Of the major averages, the Nasdaq is the only one in bear market territory, having fallen about 30% from its record high — as tech shares continue to get pummeled.*

*Apple lost 2.7%, pushing the shares into bear market territory and down 22% from a 52-week-high. The company’s recent downdraft has led Saudi Aramco to become the world’s most valuable in the world. Meanwhile, shares of Amazon and Meta Platforms closed up more than 1%.*

*Comments:*

• “Right now, confidence is shaken among market participants and people are in no mood to take on risk,” wrote Fawad Razaqzada, an analyst at City Index and FOREX.com. “Even when we see periods of relative calm, it doesn’t last very long.”

• “It’s a really hard ride for retail investors, really hard,” said Craig W. Johnson, chief market technician at Piper Sandler.

• “Even though we should reach peak inflation soon, the issue of inflation is not going to subside enough to avoid stagflation from becoming a bigger problem,” said Matt Maley, chief market strategist at Miller Tabak + Co. “Therefore, any near-term bounce should be sold, even if that bounce lasts a couple of weeks.”

*US mortgage rates jumped again this week, extending a steep climb that is shutting some would-be homebuyers out of the market. The average for a 30-year loan was 5.3%, up from 5.27% last week and the highest since July 2009, Freddie Mac said Thursday.*

*The conflict, dubbed by Russian President Vladimir Putin as a "special military operation," has fanned the flames of inflation by pressuring global energy and grain supplies.*

The cryptocurrency market has been particularly roiled, as the stablecoin Tether USDTUSD said it performed a $1 billion swap after it fell as low as 95 cents on the dollar.

*Treasury Secretary Janet Yellen said Thursday that turbulence in the cryptocurrency market is not a hazard for the stability of the U.S. financial system, in testimony at the House Financial Service Committee, while calling on Congress to pass a “comprehensive framework” for digital assets so that there are no gaps in regulation.*

*Which companies were in focus?*

• *Walt Disney shares fell 0.9%* after the entertainment giant forecast that streaming subscriber growth may tail off after better-than-forecast additions in its fiscal second quarter.

• *Siemens shares dropped 2.5%* after the German giant’s net income halved to 1.21 billion euros ($1.27 billion) in the first quarter as it suffered a 600 million euro hit from charges and impairments associated with Russia.

• *Twitter Inc. shares fell 2.2%* after the company said two executives, general managers for revenue and consumer, are leaving the company ahead of Tesla Inc. Chief Executive Elon Musk’s takeover of the social-media giant.

• *Beyond Meat Inc. shares lost 4.2%* Thursday after the company said it got a revenue got a boost from the launch of Beyond Meat Jerky, through a collaboration with PepsiCo Inc., PEP, but making the product hurt margins for the quarter.

• *GameStop Corp. shares gained 10.1%* and those of AMC Entertainment Holdings AMC rose 8% as meme stocks enjoyed an upswing.

• *AmerisourceBergen Corp. shares shed 6%*, after the drug products and distribution company’s largest investor sold off a chunk of its stake.

• *Coinbase Global Inc. shares advanced 8.9%* Thursday, but were down more than 75% on the year, after the company’s CEO recently repeated that bankruptcy is not likely despite the plunge in crypto assets from recent highs.

The Shanghai Composite finished down 0.1%, while the Hang Seng Index fell 2.2% and Japan’s Nikkei 225 lost 1.8%.

European stocks fell on Thursday as investors remained concerned about slowing growth, interest rate hikes and inflation data from the U.S.

*Economists are weighing data indicating a slowdown in growth alongside surging inflation, prompting fears of “stagflation” and a possible recession. Central banks face the unenviable task of tightening policy to rein in inflation while trying to avoid exacerbating downside risks to growth.*

*The U.K. economy shrank by 0.1% in March but expanded by 0.8% for the first quarter of 2022 as a whole, official figures showed on Thursday, missing consensus forecasts and signaling that the worst is yet to come as the country’s escalating cost-of-living crisis bites.*

*Here are key events to watch this week:*

• University of Michigan consumer sentiment, Friday

*Currencies*

• The Bloomberg Dollar Spot Index rose 0.5%

• The euro fell 1.3% to $1.0373

• The British pound fell 0.5% to $1.2194

• The Japanese yen rose 1.2% to 128.43 per dollar

*Bonds*

• The yield on 10-year Treasuries declined five basis points to 2.87%

• Germany’s 10-year yield declined 15 basis points to 0.84%

• Britain’s 10-year yield declined 16 basis points to 1.66%

*Commodities*

• West Texas Intermediate crude rose 1% to $106.74 a barrel

• Gold futures fell 1.8% to $1,821.20 an ounce.

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