Requirements:
• China’s figures continue to decline, even before the part of the day marked by the rise of major tech players, the resurgence of covid in China.
• Oil has dropped significantly, but energy consumption is still very high in 2022.
• The euro is recovering slightly against its peers, but the dollar is seen as a safe haven.
The outlook for 2022 still shows the South American market, which leads the way in terms of performance. As a reminder, MSCI EM Latin America is composed of 62% Brazilian stocks (Vale, Petrobras, Itau Unibanco, Banco Bradesco, etc.), and 27% Mexican stocks (America Movil, Wal-mart de Mexico, Grupo Financiero Banorte, and etc.). , at 5.5% of the values of Chile, 3% of Peru and 2% of Colombia. Other regions lost around 10%, except for China, which fell the most, driven by its technology stocks. MSCI China was close to a 20% drop in 2022 on Friday, a threshold that may have been crossed by part of the day.
Stock-wise, the rise in oil prices has affected the progress of energy stocks, but they are still managing the conflict. These are the only ones that are in a good position in 2022. For the rest, industries performed well last week, such as basic materials. Consumer discretionary, technology and telecoms are still lagging behind. Nothing much new compared to last week.
The products are still moving very much, even if we see that the price of energy (oil and gas) has changed a lot, which corresponds to the drop of a barrel of crude oil from 135 to 110 USD. S&P GSI Energy is still showing a 40% gain since 1er January. Prices of industrial metals (copper, aluminum, iron, nickel, lead) and agricultural commodities (wheat, corn, soybeans, coffee, sugar, cocoa and cotton) also rose earlier. They will continue to rise significantly in 2022. The increase is mainly measured in precious metals (gold, silver) and livestock (lean pork, cattle).
We end up trading on the strength of the dollar against the euro and the yen. However, the single currency rose against the Swiss franc and the pound sterling after a slightly stronger than expected ECB last week on its future monetary policy.
