The Week in Review

The Week in Review

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Key Takeaways

• Global equities struggle as bonds rise
• Investors fear rising inflation

The past week turned out to be heavily volatile and full of events as market participants tried to navigate stormy waters. The attention was diversified across markets, asset classes, and individual stocks. The global equities slumped this week as investors’ fears of a spike in inflation and rising interest rates drove the Nasdaq on Thursday lower by 3.5%. The 10-year Treasury yield hit a high of 1.64% the same day as market participants were seeking safety. Global markets were challenged on their way to the upside as investors took time to reassess current price levels.

Earlier in the week, Fed Chair Jerome Powell tried to soothe the market by stating that the Federal Reserve does not see a sharp pick-up in inflation and reassured investors that the central bank would continue to maintain the current monetary policy.

The GameStop Saga – A New Chapter

Heading to the currency market, this week, the Sterling reached a 2.5-year high against the US dollar. The GBPUSD pair peaked at 1.4230 on Wednesday. The British currency was boosted by a strong economic outlook underpinned by the success of the vaccine program and the lockdown exit plan proposed by Prime Minister Boris Johnson. The four-stage plan envisions the UK to be out of lockdown with businesses operating normally by the summer if the current optimistic scenario is maintained.

Over to cryptocurrencies, bitcoin and its peers slipped this week as the selloff in global equities ricocheted into the crypto space. Last Sunday, bitcoin reached an all-time high, breaking $58,000. Throughout the week, it slipped to $45,000, falling more than 20%. Ethereum, the second-largest coin, was also down over 20% for the week.

Gold remained stable this week, down about 1%, while silver was lower by roughly 2%. The US dollar was trading relatively flat while the Australian dollar and the Great British pound slipped on Friday.

The GameStop saga staged a comeback on Wednesday when the stock was lifted by over 100% in the last 90 minutes of trading. Another speculative stock option, Tesla, tumbled 8% on Thursday, which resulted in a loss of $13.6bn for its chief executive Elon Musk.