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No January Effect This Year? | Flow Traders Investment Competition | Week 1


Seems like the ’22 won’t benefit from the typical January effect this year. Major U.S. large stock indexes have found themselves in their second week of a consecutive loss, with the Nasdaq 100 even its third. Also, in Europe, equities pulled back on signals that the FED would start tightening their monetary policy earlier than expected by investors. 

The Eurostoxx 600, for example, ended the week by 1% lower. The CAC 40 index declined by 1,06%, The DAX by 40 bps and the FTSE MIB index lowered by 27 bps. This sentiment was shared by investors on the other side of the globe. Nikkei 225 fell by 1,25%, the TOPIX was down by 0.90 and the CSI 300 even retreated by 2%.  On the other hand, the FTSE 100 advanced by 77 bps.

The week started on a slightly bearish tone on Wall Street when analysts’ consensus has shown that four hike rates by the FED were expected in 2022. In addition, on Tuesday, Jerome Powell mentioned that the FED would act strongly to keep inflations within bandwidths. Further comments by other FED officials, Brainard in particular, repeated Powell’s pledge to act if required. Consequently, the negative sentiment in equity markets only increased. 

Inflation data, released on Wednesday, only added up to the existing sentiment. The Labour Department reported that consumer prices were up 7.0% (YoY). Core inflation ex. food and energy increased by 5.5% and core producer prices (Thursday) rose by 8.3%. Other economic releases have shown that retail sales dropped by 1.9% in December, weekly jobless claims rose to 230K, whereas continuing claims fell to 1.56M, and the Michigan Sentiment index dropped to 73.2. Lastly, the 10-year U.S. treasury yield reached an intraweek high of 1.80%. 

Economic data in Europe had a bit more of a positive tone last week. Germany’s economy grew by 2.7% last year, although the growth rate remains below pre-2020 levels. The U.K. economy grew by 0.9% (QoQ) in November 2021, and Industrial output in the EU surged 2.3%. In Japan, the Regional Economic Report shows that all regions show signs of economic recovery. Furthermore, The Tankan sentiment survey indicated that the sentiment among services sector firms increases. 

Looking at the economic calendar for the upcoming week, there are a few things to mention. On Monday, U.S. financial markets are closed due to Martin Luther King Day. The Housing Market Index will be released on Tuesday, whereas Housing Starts will be released on Wednesday. Weekly unemployment claims and existing home sales will be published on Thursday, and the Conference Board Leading Economic Index will be released on Friday. 


As stated in the Article this week and month weren’t great for investors. the investment groups (those actually participating) felt this as well. The first place is held by Mercury with a mere 0.2% return. at least they actually beat the market. This is not something that can’t be said for Corporation Future Quote (CFQ) who had an astonishing -4.95% return. I am not sure in which Quote they want to be featured but with these kinds of returns I doubt that they would get anywhere near the Quote 500.
I want to urge all groups to get into the game as soon as possible and see you next week!


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