Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
read more
SHARE
US stocks took a turn for the worse last Friday, as an increasing number of investors shied away from big tech companies. The tech-heavy Nasdaq Composite index shed 1.7%, while the S&P 500 lost 1.1% and the Dow Jones closed 0.5% in the red – the further removed from tech stocks, the lesser the damage.
Many companies associated with the artificial intelligence space suffered on Friday, including Oracle (ORCL), which fell another 4.5% after incurring a double-digit loss the day prior. Fellow chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) lost 3.3% and 4.8% respectively, while Broadcom (AVGO) plummeted over 11% following its latest earnings report, which failed to meet investors’ sky-high expectations regarding the company’s sales outlook.
Despite the heavy selloff, the poor performance in technology stocks appears somewhat contained, with broader markets remaining relatively unaffected. There is a growing sentiment that AI valuations are overblown, and this has manifested in a pivot towards other sectors, as evidenced by the fact that the Dow gained over 1% last week, while the S&P 500 and Nasdaq both closed in the red.
Gold continued to push higher last Friday, reaching highs over $4,350 before settling a hair’s breadth below $4,300. The precious metal started the week strongly this morning, rising back towards $4,340 in the early Asian session. Silver traders finally took some profit last week, lowering the white metal to a $61.91 weekly close, but the bid has once again returned as of this morning. The spotlight may turn elsewhere this week, this time to platinum, which is currently challenging $1,800 – a price not seen since 2011.
Traders have a lot to keep an eye on this week. Tomorrow, the Bureau of Labor Statistics will publish a special NFP report, which will include nonfarm payroll figures for both October and November, granting the publication additional weight. However, the report will only feature unemployment stats for November, because the household survey data was not collected in October due to the government shutdown. Tuesday and Wednesday will then provide back-to-back retail sales for October and November, while Thursday will see the publication of the latest CPI figures. The backlog is rapidly being cleared.
Moving away from the United States, this week will also see three major central bank decisions. On Thursday, the Bank of England is expected to enact a rate cut of its own, lowering the interest rate on the Pound to 3.75% from 4% currently. Later in the day, the European Central Bank will in all likelihood hold rates on the Euro steady at 2.15%. Finally, the most anticipated decision of the week lies with the Bank of Japan, which, in the early hours of Friday morning, will probably increase rates on the Yen to 0.75% from 0.5% at present. The shift to higher rates could be acutely far-reaching because low borrowing costs on the Japanese Yen have long been a source of cheap credit to markets around the world. The unwinding of such could have a detrimental impact on a number of markets, particularly those susceptible to low liquidity conditions, such as cryptocurrencies. To put the adjustment in context, rates on the Yen have not been as high as 0.75% since 1995. Despite the looming threat, the Yen does not appear to be making any strong moves, while Japanese bond yields have increased steadily for many months already, suggesting the rebalancing is somewhat priced in. Time will tell.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
OPEN ACCOUNT