US Markets Plunge.

It has been a fairly turbulent start to the year. Almost every major global index was down this week, apart from………and you won’t believe it: the FTSE 100.

This might be the first time in a year we’ve had the pleasure of reporting that the FTSE has outperformed. Now, the reason for this is no doubt due to the fact that p/e ratios in the UK are fairly low, and share prices have been less inflated by the huge amounts of money thrown into the system by the US, but we’ll take it.

Wall Street stock markets fluctuated between gains and losses yesterday, following days of mercurial trading, after a strong US jobs report underscored expectations for the first US interest rate rise of the pandemic era.

The blue-chip S&P 500 share index inched 0.4 per cent lower in Friday’s New York dealings. The technology-focused Nasdaq Composite fell 0.96 per cent, after edging higher in earlier trades. The moves came after both indices whipsawed in the previous session as traders assessed signals from the Federal Reserve that it may rapidly withdraw stimulus measures that propped up the economy during the height of the pandemic.

Last year’s double-digit gains for global stocks had been fuelled by the Fed and other central banks pushing borrowing costs to record lows as they bought huge quantities of government bonds to shield financial markets from the economic shocks of coronavirus.  

The US unemployment rate dipped from 4.2 per cent in November to 3.9 per cent in December, according to data released on Friday by the labour department. This was stronger than the 4.1 per cent reading that was forecast by Wall Street economists.

Earlier this week, minutes from the Fed’s latest meeting revealed officials were considering a faster timetable for interest rate rises than investors had anticipated, to combat elevated US inflation.

US consumer prices increased 6.8 per cent in the year to last November as a rebound in consumer demand from 2020’s pandemic-related lows coincided with supply-chain constraints. The Fed minutes showed some of its officials suggested the US central bank could raise rates even before its goal of maximum employment had been reached, in a move that has put pressure on technology stocks.

The tech sector has been lifted in recent years by low interest rates, which provide a boost to the present value of companies’ expected future profits in an effect that is magnified for early stage businesses. The S&P information technology sub-index has fallen by about 4 per cent this week. The move out of tech is ongoing and this will no doubt hurt retail investors who tend to pick the names they know.

Equity markets this week:

In Europe,

FTSE: 0.88% (sorry if we made it sound more dramatic than this, we’re just not used to the FTSE doing better than the rest)
Stoxx 600: -0.5%
Dax: -0.2%
CAC: -0.39%

US

Dow Jones: -0.5%
S&P500: -2.35%
Nasdaq: -5.08%

Rest of the World

Nikkei: -1.03%
Shanghai: -1.64%

It goes without saying these days that most of the traders on The Portfolio Platform have outperformed the market once again this week. We’ve had many solid performances of between 1% and 2% increase from:

FTSE Tracker: 1.8%
European Index: 1.7%
Cambridge Futures: 1.3%
European Stocks: 1.2%
Global Stock Basket: 1.2%
SP500 Trader: 1.2%

Last year’s outperformer has had another very solid start to 2022. Cambridge FX has added yet another 2.6% to their portfolio and all their linked accounts.

BUT: There was one trader who focuses on the Nasdaq and ran a short position all week. The Nasdaq fell over 4% this week, and the aptly named Nasdaq Bias, managed to leverage that into an 11.4% gain for the week.

That is an incredible start for them. It is also an incredible start for TPP in 2022. Nearly everyone was up, in a week where nearly every index was down! But that is what we do.

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