Last week, although quite calm, was not particularly good for the markets. All major indices experienced selloffs, only to rebound slightly on Thursday. Yet, all of them closed red on Friday, with the US market leading the downside. The S&P500, Nasdaq100, and DJIA declined by 2.9%, 2.83%, and 2.5% accordingly, with the S&P failing to stay above the 200-day moving average. The situation looked slightly better in European markets, as both STOXX600 and AEX managed to decline only by 0.86%.
PMIs on Monday indicated–not surprisingly–a contraction in economic activity. Composite indices printed values below 50 for all four releases – US, Eurozone, Germany, and the UK. With such a dull outlook, there is one surprise to the upside for the eurozone – Q3 GDP has beaten the expectations, rising 2.3% YoY.
WTI Oil came back to the continuation of its losing streak after the information about huge inventory build-ups. From its November highs, the WTI declines compound to almost 23% - not a thing investors would expect in the face of a potential energy crisis. With the front part of the WTI futures curve staying in the contango, this market seems to exhibit signs of deteriorating US economic activity. Notably, only this week the energy sector started to catch up with the oil market – the XLE declined by 9.30%.
During the past weekend various Chinese provinces announced the easing of the Zero-Covid policy. This worked as a big relief for the stock markets in China and Hong Kong and acted as a tailwind for the SSE Composite and Hang Seng, which closed respectively 1.59% and 7% higher than a week before. Will the Chinese be able to continue with the opening in the face of a possible winter wave of covid? Hard to indicate for now, but investors should remember that this is not the first time China announces the opening of its economy this year.
At the same time, Chinese trade numbers were released – and to say they are bad would be a massive euphemism. Exports and Imports both declined much above expectations, by 8.7% and 10.6% respectively. As always, the real devil lies in details – in this case, in the exports to the US, which experienced an enormous decline of 25.4% YoY. Moreover, some sources report the decline in U.S. manufacturing orders from China being as big as 40%. It seems that the US consumer is not so strong, after all.
Finally, such relatively calm markets should not put the investors’ guard down. It is only silence before the storm – the markets giving us time to rest before the next week. With the upcoming CPI releases and FOMC meeting, it may quickly get very, very volatile.
Flow Traders Investment Competition
This week we have a new leader in the competition, Capital Phi. Three weeks ago, they were leading the competition as well. Their comeback in the competition is almost as great as the comeback of The Netherlands against Argentina. Will they be able to bring it to a better end though?
Let’s take a look France, they are the defending World Champion and are always expected to do well. They are still in the running for World Champion in this edition. In our competition we have a similar player, Vico. Last year they finished fifth and they are back in the top five again, rising eight places last week. Then we have Morocco, they are the first African country to ever reach the semi-finals. Their performance is surprising to say the least. For this we have Mercury, they are holding the second place right now, after not reaching the left row of the ranking at all last year.
Then we have the countries that you would always expect to do well. One of them is Spain, they were doing great, until they unexpectedly got eliminated. Take Merx, they were doing great in the competition, as we would kind of expect. However, they have dropped five places to the ninth place last week. Hopefully they can recover again. Finally, there are countries that were seen to have no chance from the beginning, like CFQ and Aevitas who have been at the bottom of the competition.
There were some doubts about the referee in the match of The Netherlands versus Argentina. However, the referee in the Investment Competition will be consistent in enforcing the competition rules. If your Investment Group has not invested before January 1st 2023 you will not be able to take part in the Investment Competition anymore.