
The G20 summit took place in Bali, Indonesia, on November 2022…
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If we look back at the previous year, we will remember the amount of fear that gripped us when the black swan, Covid-19, appeared. It was especially visible in the performance of the US stock market. In February, S&P500 dropped from the all-time high at $3 397 to the levels around $2 270. At the same time, NASDAQ corrected by 32% from the high of $9 760. While market newbies were affected by this storm, smart people started to "buy the dips" and await further momentum. The market did not make them wait forever. After the Fed and other major central banks began to pump cash into the economy and implement loose monetary policy, the demand for the risky assets increased. As a result, the indexes retested their highest levels in the middle of 2020. The end of the year was driven by the optimistic news on vaccine distribution and the US election's outcome. Since then, S&P and NASDAQ have been reaching new peaks almost every month.
As natural as it is, a bullish market attracts everyone. However, if you are familiar with Benjamin Graham’s works, you know how dangerous the market euphoria is. The worrying signals have already appeared. According to Bloomberg, an average of 15.8 billion shares have traded daily over the past 20 days. This is the highest spike in volatility since last year's sell-off at the start of the pandemic. Some people see this market frenzy as speculation that does not have any fundamental bias. So, what should we expect: a crash of the market or just a short-term correction?
Most analysts don't expect a pop of the market bubble soon, but they confirm that a 10-20% correction to the current highs is an inevitable scenario. They note that the current bullish ride is driven by earnings growth, which is torn off market-based fundamentals. Additionally, vaccine-related optimism may lead central banks to monetary policy tightening, limiting cash in the economy. However, the chances of this event happening soon are very low.
The Bank of America expects a 5-10% correction as soon as in April. According to the bank, investors should not be afraid of the slump, as it will provide a buying opportunity. Analysts from Jefferies Group have a similar opinion. They anticipate 2021 to be “at best a flat year” for stocks.
A long-term trader may wait for the correction to buy cheaper stocks and indices. If you are a swing trader or an intraday trader, then you just need to stay calm, follow the daily news, track risk sentiment, and don't forget about money management. This way, market swings won't affect you.
The G20 summit took place in Bali, Indonesia, on November 2022…
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?
Today, at 5:00 pm (GMT +2), the Bank of Canada will publish the Overnight Rate, which represents short-term interest rates, and is pivotal to the overall pricing of the Canadian Dollar in the global markets. Let's look at how the markets are faring ahead of the BoC rates release.
In a call scheduled for January 25, 00:30 am GMT+2, Microsoft will publish the company's earnings for the final quarter of 2022 and comment on the results, projections, and outlook for the nearest future of the company.
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