Weekly News 2022/01/31-2022/02/04

This week the Dow Jones rose 1.05%, S&P 500 rose 1.55% and the Nasdaq rose 2.38%.

Despite the pandemic headwinds, the bullish sentiment sparked by Amazon's earnings report and nonfarm payrolls data has boosted the U.S stocks market closed higher on Friday. The U.S Department of Labor reported that nonfarm payrolls increased by 467,000 in January, more than all economists expected, and average hourly earnings also rose 0.7% month-on-month. The data certainly signaled an upturn in the economy, but it was bad for the market, as it provided support for more aggressive hawkish Fed action. After the data, traders saw a nearly one-in-two chance that the Fed would choose to raise its benchmark rate by 50 basis points at its March policy meeting.

This week Markets have been volatile, with some tech giants including Facebook parent Meta reporting disappointing earnings reports, but strong earnings data from Amazon helped lift sentiment, adding about $190 billion to the company's market value. Bottom-hunters hope positive corporate earnings will keep stocks attractive and offset some concerns about interest rates hike. About 272 companies in the S&P 500 have reported their earning results, 82% have met or beat expectations, and profits have beaten expectations by 8.8%.

Amazon (NASDAQ: AMZN) reported fourth-quarter net sales of $137.4 billion, up 9% year-over-year, and fourth-quarter operating profit of $3.5 billion, up 98% year-over-year, beating estimates of $2.43 billion. Earnings per share were $27.75, far exceeding expectations of $3.77. At the same time, Amazon also announced that the Prime member fee will increase to $139/year, from $119/year before.

Snap (NYSE: SNAP) released the 2021 fourth-quarter and full-year results. The report shows that Snap‘s fourth-quarter revenue was $1.298 billion, an increase of 42% compared with $911 million in the same period last year. Net profit was $22.6 million, the first quarterly net profit in history, compared with the previous year. The number of daily active users in the fourth quarter was 319 million, exceeding analysts’ expectations of 316 million.

Apple (NASDAQ: AAPL) is gearing up for a spring launch event around March 8 to unveil the new iPhone SE and new iPad Air. It is reported that the iPhone SE upgraded after two years will support 5G and upgrade the camera and processor, but the appearance has not changed much. The new iPad Air will also have a 5G-enabled version, along with improved hardware specifications. In addition to new products, Apple intends to officially release the iOS 15.4 upgrade in mid-to-early March, which will support Face ID to identify users wearing masks.

According to the market data on Friday, the price of Bitcoin rose rapidly, rising by more than 11% within 24 hours. The latest quotation was $41,696, and the highest rebounded to $41,900, reaching the $40,000 mark again. Followed by Ethereum, which also rose by more than 10%, the highest price in 24 hours exceeded $3,000, and the latest quotation was $2,996. Currently, Bitcoin and Ethereum account for 40% and 18% of the total cryptocurrency market capitalization. This rebound is the first time that the price of Bitcoin has reached the $40,000 mark and the price of Ethereum has hit the $3,000 mark for the first time since the cryptocurrency market plunged on January 21.

At present, the mainstream giant capital led by Wall Street in the United States gradually regards it as a kind of “digital gold”. Due to the parallel relationship between Bitcoin and blockchain technology, the total amount of Bitcoin is limited to 21 million, which naturally has mathematical scarcity, is similar to the physical scarcity of gold, so large funds including Tesla, Grayscale Capital, etc. in the United States regard it as a substitute for “gold” in the digital age. In order to combat the risk of inflation, Bitcoin has gradually become an alternative “safe-haven asset”.

On Friday, gold prices rose slightly in volatile trading closed at around $1,808 in late trading. After the release of the non-farm payrolls data, it once fell to $1,792.30 an ounce. Growing concerns about inflation helped cushion a stronger dollar and rising U.S. bond yields. The pressure came after the U.S. released unexpectedly upbeat employment data. However, the gains in gold prices were limited, and the yield on the benchmark 10-year U.S. Treasury bond hit more than a two-year high. Previously upbeat U.S employment data supported the case for the Fed to raise interest rates, and the dollar rose to make gold expensive for foreign buyers.

Data showed that U.S. non-farm payrolls increased by 467,000 jobs in January. Oil prices also rose to a seven-year high. All data added to inflation fears and dampened investor risk sentiment.

We will continue to see increased inflationary pressures in the economy. As a result, the market expects the U.S. Federal Reserve to take steps to fight inflation. However, this has created the tug of war we've seen in the gold market effected by inflationary pressures.

Oil prices continued their strength, with U.S. oil rising more than 3% at one point, hitting a high of $93.17/barrel since September 2014, and Brent oil hitting $93.70/barrel at its highest. The market structure is at its strongest level in years, indicating a scarcity of supply. Inventories in major oil storage centers are falling, and key price indicators point to an expected lingering of supply constraints.

As the economy recovers from Covid-19, traders increasingly suspect demand is undervalued. The Saudi state oil company said late last month that consumption would soon return to pre-pandemic levels. However, International Energy Agency data showed consumption in the first quarter would be about 1 million barrels per day lower than in the same period in 2019.

Senior market analyst Ed Moya said the rise in crude oil prices showed no signs of slowing down as supply and demand factors remained very bullish. Geopolitical risks like the Russia-Ukraine situation and Iran nuclear talks were also uncertainties for oil prices as they appeared to be more likely to lead to a tighter market in the short term. Meanwhile, OPEC+ has struggled to meet its pledge to increase production by 400,000 barrels per month. In January, the 13 OPEC members added just 50,000 barrels per day of production, raising concerns among traders that the market is running out of spare capacity.

The dollar rose from a two-week low on Friday after data showed the U.S. added more jobs than expected, raising the prospect of a rate hike by the Federal Reserve at its March policy meeting. The dollar rose against most G-10 currencies. The U.S dollar index was up 0.16 at 95.48 on Friday, but the dollar was still down 1.77 percent for the week, its biggest weekly percentage drop since November 2020.

Data showed that U.S. nonfarm payrolls increased by 467,000 jobs in January. Average hourly earnings, a closely watched measure of wage inflation, also rose 0.7% in January and were up 5.7% from a year earlier. This data helps offset concerns over dollar-bearish real earnings squeeze and stagflation themes and could inspire the Federal Open Market Committee.

The euro remained firmer against the dollar gained 2.67% for the week, its best weekly performance since late March 2020, helped by a hawkish turn from the European Central Bank on Thursday. The euro stalled near resistance at $1.1480 as the dollar rose after the U.S. jobs report.

The Bank of England raised interest rates to 0.5% on Thursday, marking the first time since 2004 that the Bank of England has raised interest rates at two consecutive meetings, and sterling has also been one of the main factors driving currency markets this week. However, GBP/USD was down 0.49% at 1.3531 on Friday and gained nearly 1% against the dollar this week.

OnePro Special Analyst

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