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Wealth Daily 15 March 2022

WEALTH DAILY 2022-03-15
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The Dow Jones Industrial Average closed nearly flat at 32,945.24 on Mon, while the other major US equity indexes fell for third day. The S&P 500 index fell 0.74%. The tech-heavy Nasdaq Composite retreated 2.04%. The small cap Russell 2000 dropped 1.92%. 

Some US tech shares fell on worries about supply-chain problems from China. Apple (AAPL US, -2.66%) shares fell after supplier Foxconn (2317 TT, -0.97%) halted operations at its Shenzhen sites following a city-wide Covid lockdown. 

Rising Treasury yields helped US bank stock buck the general market trend. Wells Fargo (WFC US, +2.87%), JP Morgan (JPM US, +0.99%) and Bank of America (BAC US, +2.16%) shares rose.

 JPMorgan analysts downgraded at least 10 Chinese internet stocks to sell-equivalent ratings on Mon, calling them “uninvestable” due to “rising geopolitical and macro risks.” The Invesco Golden Dragon China ETF (PGJ US) fell 11.85% on Mon. Tencent (700 HK, -9.79%) tumbled in Hong Kong on reports the company faces a record fine for flouting anti-money laundering rules. 

Shares of US-listed casino operators with exposure to Macau, Wynn Resorts (WYNN US, -7.52%), LV Sands (LVS US, -11.89%) and MGM Resorts (MGM US, -3.27%), fell as Covid-19 restrictions in China stand to curb visitation.

The yield on the 10-year Treasury note jumped 14.13 basis points (bps) to 2.1330%. The 2-year Treasury rose to 1.851%, up from 1.748% on Fri. 

The yield curve between 2-year and 10-year notes steepened 5 bps to 29 bps, after reaching 19 bps a week ago. Since a flattening yield curve is a recession signal, a steepening yield curve indicates decreasing recession risk. 

The iShares iBoxx High Yield Corporate Bond ETF (HYG US) fell 1.19%.  Commodities dropped and the US dollar edged lower on Mon. According to commodity traders quoted in media, supply concerns faded on ceasefire talks. Talks between Russian and Ukrainian officials are expected to resume on Tue. 

The front-month Brent and WTI futures closed down $5.77 at US$106.90/bbl and $6.32 at US$103.01/bbl respectively. 

The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.13% to 98.999. 

Usually, if the dollar is weaker, that is bullish for precious metals. However, on Mon, safe-havens were out of favor. The most actively traded US gold futures (Apr) contract settled down $24.20, or 1.2%, at US$1,960.80/oz. May silver, which is the most actively traded silver futures, fell 86.2 cents, or 3.3%, to end at US$25.298/oz. 

European equity markets finished higher on Mon. The UK FTSE gained 0.53%, France's CAC 40 rose 1.75%, while the German DAX advanced 2.21%.