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.
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Markets are becoming increasingly sceptical of the sky-high valuations in the artificial intelligence sector. Despite strong third quarter earnings, Palantir (PLTR) stock collapsed almost 8% on Tuesday as investors questioned whether the company justified its current price-to-earnings ratio of 230. Advanced Micro Devices (AMD) and Nvidia (NVDA) also lost out, with both chipmakers losing the better part of 4% during yesterday’s session. The flight from tech stocks pushed the Nasdaq Composite down 2%, with other US indices also incurring losses. The contagion is spreading, with Asian stock markets taking a hammering this morning. The Japanese Nikkei 225 index plummeted over 4% from the opening bell and other markets in the region are looking very nervous. The tech sector has been booming all year and a growing number of investors are beginning to ask if the AI sector is indeed in bubble territory. Among them, Michael Burry, who rose to fame for predicting the 2008 housing market bubble, disclosed on Monday that his hedge fund has taken out puts on Nvidia and Palantir.
Moving on to cryptocurrencies, the outlook is bleak. Bitcoin is trying to decide whether it wants to dive back into five-figure territory after experiencing heavy selling pressure over the past few days. Prices briefly dipped below $100,000 yesterday and again this morning, although such forays remain only wicks for now. A precarious situation for Bitcoin holders, but things are far worse for those stuck in altcoins. The broader crypto market has taken a beating recently, with many projects seeing multi-month lows. The US government shutdown is starting to have wider-ranging effects, with liquidity drying up from private financial systems and instead getting stuck in the government’s Treasury General Account. Eventually, the shutdown will end and the cash contained within will be unleashed, but until such a time arrives, asset markets are starved of capital and cryptocurrencies are no exception.
Precious metals have also been struggling so far this week, with gold falling well below $4,000 yesterday and silver sinking to $47 per ounce. Rate cut odds have shifted significantly to the downside following Jerome Powell’s latest comments and the US dollar has reacted accordingly. The DXY closed above 100 yesterday and other major currencies are feeling the pressure. The Pound Sterling in particular is taking a beating, barely hanging on to $1.30 by Tuesday’s close.
Risk Warning : Trading derivatives and leveraged products carries a high level of risk.
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