What a rollercoaster was last week on the US stock exchanges and beyond. Global markets are signalling fear and the performances across the board are showing just that.
Let us start by saying that gold is up. A clear indication that investors are looking at safe commodities in times of uncertainty. As matter of facts, Gold Futures performance over a year is up by 7.32 per cent and a whopping 18.80 per cent over 2 years. Last week alone Gold went up 1.57 per cent. Yet, the best performing precious metal was Palladium at +4.05 per cent, followed by Platinum at plus 2.86 per cent.
And that is pretty much all in terms of positive news. Among the category of Commodities, Natural Gas was down 4.13 per cent, one of the worst performances in a long time.
Coming to the stock markets, the picture was even bleaker. On the last day of last week, Dow lost 1.76 per cent, S&P 500 went down 2.02 per cent, and Nasdaq closed with a contraction of 2.68 per cent, erasing all gains accumulated in the days before, and highlighting the fear of the investors, running away from anything risky.
Especially in tech. Nvidia was one of the biggest losers, with a contraction of 7.63 per cent. But also Meta (formerly known as Facebook) which continues the loss streak, with a 4.17 per cent loss in a single day.
Google lost 3.41 per cent, Microsoft 2.94 per cent, and Amazon 1.96 per cent. Tesla — in the cross-road between tech innovation, energy, and the traditional automotive — lost 5.09 per cent.
Among the innovators, Palantir lost a shocking 15.75 per cent, Roku 11.35 per cent and Twilio 9.02 per cent. It was a minefield across the board.
In the Crypto space, Bitcoin lost 6.3 per cent and Ethereum 4.9 per cent. Among the biggest losers in the top 20 coin by market cap, Cardano, Solana, Polkadot, Litecoin, and Polygon, were all in the red, with losses around 10 per cent in the 7 days cycle.
The crypto market cap has lost nearly $1tn in total liquidity since November 2021, and the daily volumes are down 42 per cent form the all-time high.
In the traditional markets, the only sectors that survived the “earthquake of last week” were consumer staples and utilities, with a shy green of 0.74 per cent and 0.17 per cent respectively.
But what has caused all these losses? Some observers are reasoning that the geo-political tensions have played a key role in scaring the investors away from anything risky. Others point fingers to inflation, and the measures that the US Fed is planning to counter the effects of the highest inflation rate in 40 years.
Bond yields have suffered a lot last week, with a sharp 1.97 per cent contraction on the 10-year T-note, after breaking to new heights over the past couple of months. But the calculus over at the US Fed could be: “Are we going to get that aggressive front loaded rate hike of 50 basis points in march?”
The market is betting against that, by saying 60 per cent chance of only 25 basis points. So it looks like the market has somewhat digested those very hawkish comments by James Bullard, the St Louis Fed President, which just last week said that inflation ‘could get out of control’, so action is needed now.
But probably the market was simply structurally weak to begin with, and the investors decided to look at safer options for now.
