The dollar is declining, but it’s not helping other currencies
The dollar continues to develop a pullback from multi-month highs, but it does not help other assets. The weakening us dollar often supports the growth of quotations of stocks and commodities – but not this time.
On the US stock markets continues sale of securities of technology companies. The Nasdaq lost 3% over Monday and at the start of trading on Tuesday developing the decrease to the lowest levels since may. All because of a loss in value of assets such giants as Google, Amazon and Apple. Pressure on the quotation of the manufacturer of iPhone has reduced the capitalization of the company at 16.5% since the beginning of the month. Shares of Facebook have fallen by 40% from a peak of mid-year and fell to levels Feb 2017.
Powell’s words about a possible pause in the monetary policy are unable to permanently instill optimism of bidders. Investors flocked to buy US Treasury bonds. The words of the head of the fed was perceived as a signal that the Backup System is less confident in maintaining such a strong pace of economic growth.
In the period of abnormally strong growth of the economy, the greatest demand is for “growth stocks”, while reducing to the usual values, the focus of investors moved on such characteristics as P/E. the highest values of this parameter, certainly, of securities of the IT-sector.
Judging from what we see in the markets, a signal of the end of the era of easy money, the fed filed in early October, has caused a sobering bidders. This was evident not only in the rotation out of “growth stocks” in “value stocks”, but in the changing dynamics of oil (-25% from peak in October), and the collapse of quotations of the major cryptocurrencies (-30%). We can say that now the markets and the regulators – on their way out from irrational exuberance to the assessment of the situation as “alarming”. However, we cannot exclude that the emotional sale can divert the index is too low, discarding them in the next few weeks to the other extreme – the “extreme fear”.