Improved sentiment at the end of the week

13.05.2022 16:36|Conotoxia Ltd Analyst Team

The past week may go down in the history of the capital markets, especially the history of the cryptocurrency market. Unfortunately, it will not be a story of success, but of failure, which will perhaps strengthen the entire market in the future.

The Dow Jones gained more than 200 points at the open of trading on Friday, while the S&P 500 and Nasdaq gained 1.1 percent and 1.5 percent, respectively, as investors were able to take advantage of lower valuations at the end of a week dominated by concerns over aggressive monetary tightening and slowing economic growth. Federal Reserve Chairman Jerome Powell said Thursday that lowering inflation to a 2 percent target could cause some pain, adding that resolving the problem of rising prices without triggering a recession may depend on external factors. Markets interpreted the statements as more dovish, easing concerns that the Fed will at some point raise rates by 0.75 percentage points to curb high inflation. For the week, despite Friday's rebound, the Dow and S&P 500 fell 3.6 percent and 4.7 percent, respectively, and the Nasdaq Composite fell 6.4 percent.

If we take a broader look at the statistics on the scale of declines on U.S. indices since the beginning of the year, 2022 and its 91 trading days so far seem to be the worst year since 1932. Then, 90 years ago, for 91 days of trading on Wall Street, the S&P 500 index fell by more than 28 percent. Today, it was less than 18 percent. Historically, the current correction is something extraordinary and rare, so some investors may even consider it a kind of opportunity.

On the cryptocurrency market, some speculators may have also considered that it will be harder to make things even worse than they were in the last few days, and whoever was supposed to sell their coins in a panic has already done so. The market has gone through a cleansing of sorts and as sentiment improves on other risky assets, BTC/USD is trying to hold above the $30,000 level.

The further fate of stock indices or cryptocurrencies may depend on the inflation factor. If the one in the U.S. in March caught its peak at 8.5 percent, and subsequent readings, will be lower and lower, like April's 8.3 percent, it is possible that the improvement in sentiment may be more durable.

 

Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.