U.S. equities closed out their first quarterly loss in two years due initially to soaring inflation and the Fed’s hawkish pivot. Economic measures of inflation had already reached 40-year highs in the previous quarter, with the November CPI registering +6.8%, before climbing higher in consecutive months to the most recent reading of +7.9% in February.
According to Nasdaq’s Market Intelligence Desk Team, while global economies are still adjusting to Covid’s impact on supply chains and the shift in consumer spending, Russia’s invasion of Ukraine at the end of February was the equivalent of adding fuel to the inflation fire. Commodity and rates accelerated higher from existing uptrends as the West imposed strict sanctions on Russia’s economy and central bank. Current economic data shows the economy is strong (i.e., the ISM New Orders index is above 60), the surge in inflation and rates over Q1 is likely to weigh on economic growth and slow corporate earnings. Corporate guidance on wage increases and margins will be a key focus during the upcoming Q1 earnings season. And while there is seemingly little progress made in settlement talks between Russia and Ukraine, credit spreads have pulled back to pre-crisis levels, which typically bodes well for equities. (Source: First Quarter 2022 Review and Outlook, NASDAQ, <https://www.nasdaq.com/articles/march-first-quarter-2022-review-and-outlook> )
Gain exposure to the U.S. market with the warrants
With the issuance of both call and put warrants, investors with either bullish or bearish views can gain exposure to the U.S. markets. A call warrant moves in line with the underlying, increasing in value as the underlying increases, while a put warrant moves in an opposite direction to the underlying, increasing in value as the underlying decreases, and vice versa. The put warrants also allow investors to hedge their U.S. portfolio against any downside risk in the market. In addition, with warrants being a leveraged product, investors can gain exposure with a smaller capital outlay, and yet will not be subject to any margin calls.
View useful resources below:
Live Matrix – as usual, the live matrix will be available for all Macquarie issued DWs. The price matrix is always fixed and accurate! (www.thaidw.com/tools/livematrix)
DW search – find the DJI, NDX and SPX DWs via the DW search tool, which are also shown when you select the ‘US index’ underlying (www.thaidw.com/tools/dwsearch)
Underlying charts – View the underlying charts page for DJI, NDX and SPX (www.thaidw.com/tools/underlying)