Home > Markets weekly recap: Stocks, crypto battered as Fed rate hike weighs on investor sentiment

Markets weekly recap: Stocks, crypto battered as Fed rate hike weighs on investor sentiment

  • Stocks plummeted this week as investors continued to fret over impending interest rate hikes.

  • A broader market slump also saw the crypto space lose hundreds of billions in market capitalisation as Bitcoin led the market in the worst weekly slump since mid-December.

Stocks tumbled

Markets opened on Tuesday after Monday’s Martin Luther King Jr. holiday. But the extended weekend did little to help stem the previous week’s slump in stocks.

Over the week, the S&P 500 fell 5.7%, the Dow slipped 4.6% and the Nasdaq tumbled 7.6%, whose double-digit slump from November high pushed the index into a correction. 

Tech stocks continued to feel the most pressure, with the sector down nearly 10% YTD, while consumer discretionary slid on weaknesses in automakers. Among Big Tech, Amazon fell 5.95% on Friday and Meta Platforms closed 4.23% lower.

European shares also tumbled over the week.   The pan-European Stoxx 600 Index fell 1.40% while UK’s FTSE 100 slumped 0.65% after reaching a two-year high earlier in the week. Germany’s DAX slid 1.76% as did France’s CAC and Italy’s FTSE MIB shed 1.04% and 1.75% respectively.

Crypto battered

Cryptocurrencies also sank over the week, with Bitcoin slipping below $35,000 for declines of over 20%. Most other digital assets also tumbled double digits with over $500 billion in market capitalisation wiped off the market.

The correlation with stocks continues and analysts are pointing to further pressure on prices if stock markets see more losses over the coming week.

Central banks outlook

In the week, the Bank of Japan, the People’s Bank of China, Bank of England and European Central Bank all featured in one way or the other.

BoE Governor Andrew Bailey said UK inflation could potentially drag longer than earlier thought. His remarks came after data indicated the country’s inflation rose 5.4% in December, the fastest pace in nearly three decades.

The ECB dashed expectations that it would be raising interest rates in 2022.

Bank of Japan (BoJ) retained its dovish outlook after a two-day meeting on Tuesday. The central bank will continue with the current monetary policy and projects the economy to grow by 3.8% year over year.

The People’s Bank of China (PBOC) cut the interest rate on the medium-term 1-year loan for the first time since April 2020. It came after China’s GDP was shown to have grown by 4%, down from 4.9% in Q3.

The week was relatively quiet for the Federal Reserve though, with the US central bank’s FOMC meeting to come next week. However, the market remains jittery about rate hikes even as industry experts point to the need for the Fed to be aggressive to curb runaway inflation.


(Netflix shares sink)

The week saw several major companies release earnings reports, with the broader sell-off pressure intensifying for some after setbacks in guidance. Several other stocks plunged despite companies posting better than expected earnings.

JPMorgan, Morgan Stanley, Bank of America and Goldman Sachs all reported fourth-quarter earnings. The shares of the top financial services providers however tanked across the board to contribute to the decline on Wall Street.

The week’s highlight loser was Netflix shares, which slipped more than 20% on Friday to see calls for more losses in growth stocks that rocketed during the pandemic. The Peloton stock also fell sharply on Thursday before paring some of the losses on Friday. 

What to watch out for next week

Next week, the FOMC meeting, geopolitical tensions and earnings will be critical developments likely to shape market direction.

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