Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Yields march higher, oil slides: US weekly market update

Jakir Hossain  |  21 Mar 2022Text size  Decrease  Increase  |  
Email to Friend

With the constant rumble of the Ukraine war and the Federal Reserve’s inaugural rate increase in the rear-view mirror, the focus remains on ripples from both across markets, especially in the oil and the bond markets.

Market review

Oil price volatility remains in the spotlight after sanctions were imposed on Russia, one of the world’s biggest exporters of the commodity. Oil prices fell this past week after rising to about US$130 per barrel earlier this month. That earlier spike in energy prices, combined with surges in other commodities, has been fueling concerns that inflation pressures will remain higher, longer. The International Energy Agency, which works with countries to help shape energy policy, will hold a meeting for energy and climate ministers in Paris on March 23 and 24.

In the bond market, yields have continued their upward march with inflation pressures pushing them to higher levels than many in the market had been expecting just a few months ago. The US Treasury 10-year note finished Friday at 2.15%, up from 1.71% at the beginning of March and 1.63% at the start of the year. Short-term yields have had an even more dramatic move, reflecting the expectations for a stepped up pace of Fed rate increases in 2022. The yield on the US Treasury 2-year closed out Friday’s session at 1.96%, up from 1.3% at the beginning of March and 0.79% at the start of 2022.

Many in the markets will be keeping a close eye on the gap between the yields on the 2-year and 10-year note. That difference has been narrowing – a trend known as a flattening yield curve. Should short-term yields move above long-term yields – known as an inverted yield curve – that could trigger alarm bells. An inverted yield curve is often seen as a precursor to a recession.

US President Joe Biden will travel to meet with members of NATO in Europe to discuss the military alliance’s response to the war in Ukraine, and what steps may be taken next. Those talks are scheduled for March 24. While on his trip Biden is also expected to attend a European Union meeting.

For the trading week ending March 18:

  • The Morningstar US Market Index was up 6.4%.
  • The best-performing sectors were consumer cyclical 9.2% and technology 8.3%.
  • The worst-performing sectors was energy, down 3.1%.
  • Yields on the U.S. 10-year Treasury note rose to 2.15% from 2%.
  • Oil ended the week down 4.2% to $104.70 per barrel.
  • Of the 863 U.S.-listed companies covered by Morningstar 767, or 89%, rose, and 96, or 11%, fell.

Gainers

The best performers in the past week were TAL Education Group (TAL), Block (SQ), VNET Group (VNET), JD.com (JD), and GDS Holdings (GDS).

Leading advancers

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

Chinese ADR-listed companies gained, recouping losses from the earlier sell off. The move came after China announced they would work to keep their stock market stable and support listing shares overseas.

Stocks in the technology and consumer cyclical sectors were also higher. DocuSign (DOCU), Nvidia (NVDA), Roku (ROKU), and Zoom (ZOOM) all rallied.

Stocks in the travel industry gained as declining oil prices eased concerns about cost pressures for carriers. United Airlines (UAL), American Airlines (AAL), and Delta Air Lines (DAL) soared. Retailers such as Farfetch (FTCH), Kohl’s (KSS), Macy’s (M) also rose higher.

Other notable movers were BioNTech (BNTX) and Moderna (MRNA), both of which closed up after the companies filed for approval of a second coronavirus booster shot.

Highlighted advancers

Losers

The worst performers in the past week were Weatherford (WFRD), Cheniere Energy Partners (CQP), Liberty Oilfield Services (LBRT), Coupa Software (COUP), and Core Laboratories (CLB).

Leading decliners

Oil stocks faced the largest losses in the past few days with various parts of the industry simultaneously falling. Oil prices fell as low as $94, and large oil companies such as Exxon Mobil (XOM) and Chevron (CVX) fell.

Highlighted decliners

Key events scheduled for next week:

  • Monday: Nike (NKE) Earnings
  • Tuesday: Adobe (ADBE) Earnings; Carnival Cruise Line (CCL) Earnings; NVIDIA (NVDA) Investor Day
  • Wednesday: General Mills (GIS) Earnings
  • Thursday: Moderna (MRNA) Investor Day

Data Journalist for Morningstar

© 2022 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

Email To Friend