6 months ago • 2 mins
What’s going on here?
Global stock markets had a nasty surprise this month.
What does this mean?
Stock markets around the world kicked off the year with a boom, as the newfound allure of AI and sunny expectations for interest rate peaks jazzed up share prices. But as the months rolled on, the music changed. A string of strong US economic updates and Europe’s stubborn core inflation made investors rethink interest rate trajectories. Add mounting evidence of China’s economic slowdown to the mix too, and you’ve got a recipe for market jitters. In just the first three weeks of this month, heavyweights like the US’s S&P 500, Europe’s Stoxx 600, and China’s CSI 300 collectively lost a whopping $3 trillion in value – equivalent to the value of the UK’s entire FTSE 100.
Why should I care?
Zooming in: Maleficent seven.
Over in the US, tech giants are feeling the heat. This month the “magnificent seven” – Amazon, Alphabet, Apple, Microsoft, Meta, Nvidia, and Tesla – all suffered their first three-week-long losing streak of 2023. So, with AI being the talk of the town, all eyes are on AI darling Nvidia as it gears up to announce its results. Analysts have set the bar high, upping their price targets just last week. But if the firm doesn’t measure up to those lofty heights, it might just further dent the wider market.
For markets: Beware of the bear.
Markets, like life, have their highs and lows – and some see this downswing as a sign the market’s healthy. But there is a lot of caution around right now: after all, the ratio of bearish put options to bullish call options purchased is nearing a two-year high, showing investors are getting pretty defensive. And with recent lackluster economic data from the eurozone and the UK, it might be wise to avoid chucking heaps of cash into markets anywhere right now.
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