Market Insights

Microsoft announced it will buy the video game giant Activision Blizzard in a USD68.7 billion all-cash deal. The videogame maker, known for its popular game "Call of Duty", had a stellar performance until February of last year. But the company's share price dropped as much as 45% as it got hit by allegations of sexual harassments and misconduct. This morning, shares of Activision jumped 38% in pre-market before being halted. In contrast, Microsoft shares are down more than 2%, as investors are judging the deal too expensive.

Yields on US 10-year Treasury Note is causing havoc on markets, up 4-5bp at 1.83%, after retreating from 1.857% at one point. Investors are expecting interest rates to rise and its putting pressure on the yield curve. The rise in borrowing costs is pressuring down stocks globally this morning. The Nasdaq is lower by 1.7% and the S&P 500 by 1%. Europe's Stoxx 500 is down by 1%. As we are entering earnings season, stocks are particularly sensitive as companies resume buybacks only after earnings are out. More visibility from central banks would be welcomed by markets and possibly lower the volatility. 

The ruble is getting hit hard as negotiations between US and Russia seem to go nowhere. The Ruble is losing steam despite rising oil prices. Markets are pricing rising odds of near term economic sanctions that will further weaken the Russian economy. Recent sanction fears seem to have interrupted the great rally ruble enjoyed last year. Data from options traders indicate high level of bearishness.

China's economy expanded 1.6% on a quarterly basis in 4th quarter of 2021. However, retail sales disappointed as they increased 1.7% year on year in December, versus the 3.8% expected, and down from 3.9% growth in November. With prices stable, China's central bank, the PBOC is shifting the focus to boosting economic growth. It responded with a rate cut this morning, lowering the interest rate on around USD110.2 billion worth of 1-year medium-term lending facility loans to some financial institutions by 10bp to 2.85%. The central bank also lowered borrowing costs of 7-day repos by 10bp to 2.10%. We believe it is likely the POBC will continue to act to support its economic growth, as it attempts to manage a soft-landing for its cooling property market. China's CSI 300 closed 0.86% higher today, but it is still down 13.6% from where it was a year ago. 

JPMorgan misses revenues estimates and reports a fall in earnings per share by 12% to USD 3.33. Return on tangible Equity stood at 19%, while return of common equity decreased to 16%. Despite reporting "solid results", market didn't appreciate higher operating expenses and a lower efficiency ratio. The stock dropped as much as 4%, and is trading now at USD163 in premarket trading.