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While cryptocurrencies saw some relief last week, global equity markets were hammered again. What we’ve seen is waterfall declines across the board in major equity markets. It seems like global sentiment is the culprit here, given the alignment in the severity of declines across each of the major markets.
The continued sell-off is largely seen as due to concerns over rising interest rates and an increased probability for higher inflation. World economies and company earnings generally remain in good shape, and the consensus seems to be that this more technical and sentiment based rather than fundamentally driven. If true, the odds still favor an eventual continuation of the uptrends.
This was the second week of selling, and some serious technical damage has been done in the charts so recovery could take some time. And, it’s not clear yet that bottoms have been reached. For the near-term, the U.S. market had a relief rally at the end of the day on Friday, Feb. 9, so that short-term bullish sentiment could carry over into the beginning of the week. As of last week, Jan. 29 – Feb. 4, each market is now in negative territory for the year whereas before the selling global equity markets were experiencing strong relative performance for the first month of the year.
The Shanghai Composite led the way down with a 9.6% drop to end at 3,129.55 and followed very closely by a 9.5% decline in the Hang Seng. Bringing up the rear was the BSE 30 Sensex with a fall of 3.0% to close at 34,005.76, followed by the FTSE 100, down 4.7% to end at 7,443.40.
FTSE 100 Index: all the way to bottom of one-year consolidation range