This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.

Please create a password or click to receive a login link.

Please enter your password or get a login link if you’ve forgotten

Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

We'd like our readers to start paying for Daily Maverick

More specifically, we'd like those who can afford to pay to start paying. What it comes down to is whether or not you value Daily Maverick. Think of us in terms of your daily cappuccino from your favourite coffee shop. It costs around R35. That’s R1,050 per month on frothy milk. Don’t get us wrong, we’re almost exclusively fuelled by coffee. BUT maybe R200 of that R1,050 could go to the journalism that’s fighting for the country?

We don’t dictate how much we’d like our readers to contribute. After all, how much you value our work is subjective (and frankly, every amount helps). At R200, you get it back in Uber Eats and ride vouchers every month, but that’s just a suggestion. A little less than a week’s worth of cappuccinos.

We can't survive on hope and our own determination. Our country is going to be considerably worse off if we don’t have a strong, sustainable news media. If you’re rejigging your budgets, and it comes to choosing between frothy milk and Daily Maverick, we hope you might reconsider that cappuccino.

We need your help. And we’re not ashamed to ask for it.

Our mission is to Defend Truth. Join Maverick Insider.

Support Daily Maverick→
Payment options

Traders Gasp for Breath After Day of Twists Shakes Big...

Business Maverick

Business Maverick

Traders Gasp for Breath After Day of Twists Shakes Big Tech, Oil

Stock market information at the Nasdaq MarketSite in New York, U.S. Photographer: Michael Nagle/Bloomberg
By Bloomberg
25 Feb 2022 0

Traders booted up their terminals at the U.S. open to find risk assets in familiar selloff mode as the Ukraine invasion sent the Nasdaq 100 into a bear market. 

Just hours later, dip buyers — unexpectedly — emerged across Wall Street to spur a rally in major indexes while oil prices reversed gains.The Nasdaq 100 Index fell as much as 21% below its November high — more than enough for an official bear market — before reversing to end the day to close up 3.4%, the most in 11 months. Futures tracking the technology-heavy index then retreated 0.5% as of 10:15 a.m. in Tokyo on Friday.

Brent oil jumped as high as $105.79 a barrel in the immediate aftermath of Russia’s invasion, and West Texas Intermediate crude topped $100. The benchmarks ended the day at $99.08 and $92.81, respectively.

Seeking to make sense of the reversal, strategists cite everything from a less-aggressive outlook for U.S. monetary tightening and an upcoming release of strategic petroleum reserves to more attractive cross-asset valuations.

“Stocks don’t always move in the way we expect them to,” Callie Cox, eToro U.S. investment analyst, said on Bloomberg’s “QuickTake Stock” broadcast. “We’re sitting here processing these headlines and trying to understand what they mean for the global economy, but first and foremost, fear is a contrarian indicator. While we’re all rightfully fearful right now, some investors may be seeing this as a time to jump back in.”

The Nasdaq 100 closes up 3.4% after approaching bear territory

Trading was particularly volatile in major technology and internet stocks. Microsoft Corp., erasing its initial decline, rose 5.1%. Ditto Meta Platforms Inc. after the Facebook parent neared a 50% drawdown from a September peak. The ARK Innovation ETF (ticker ARKK), Cathie Wood’s flagship fund touting tech innovation, gained 7.8%.

The odds that the Federal Reserve will lift borrowing costs by 50 basis points in March retreated Thursday, according to Bloomberg data. Higher interest rates can eat into the future profits of so-called growth stocks.

“Part of the reason Nasdaq rallied first is because the tail risk of the 50 basis points in March is now probably off the table and that creates different probabilities going forward on rates,” Alicia Levine, head of equities and capital markets advisory BNY Mellon, said on Bloomberg Television. “Therefore, the worst case scenario for tech and long-duration assets was essentially taken off the table.”

Read more: Biden Ratchets Up Russia Sanctions to Pressure Putin on Ukraine

Market technicians see another reason for the spirited reversal: Bearish momentum had already reached historic extremes to leave sellers exhausted. Analysis from Bespoke Investment Group shows major U.S. stock indexes dropped into deeply oversold territory at the Wednesday close to levels that have historically set the stage for a rally of sorts.

“The weakness in U.S. markets seems the most overdone with this move being sentiment- rather than economically-driven,” said Altaf Kassam, EMEA head of investment strategy and research at State Street Global Advisors.

To some, this gave a green light.

“We have bought this morning’s dip in the Nasdaq futures, taking the opportunity to reduce our underweight position in U.S. growth stocks,” Paul O’Connor, head of multi-asset at Janus Henderson Investors, said by email.

Brent oil breaches $105 a barrel before giving up gains

Problems have been brewing since the start of the year amid skyrocketing inflation, disappointing earnings and the prospect of conflict. Companies on the Nasdaq 100 had lost roughly $3 trillion in market capitalization so far this year as investors grappled with a double whammy of rising interest rates and slowing growth.

Yet falling prices caught the attention of bargain hunters.

“It may be bottom-fishers stepping in the market, having gotten technically oversold,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “You’re seeing a little bit of a lift in areas that had been most under pressure, including tech broadly.”

Still, some analysts think this market relief may be brief.

“If investors are bidding up the Nasdaq 100 because they think Putin brought back the Powell Put, they may be sadly disappointed,” said Max Gokhman, chief investment officer for AlphaTrAI. “The Fed isn’t going to stop tightening when the U.S. labor market remains tight and growth is above-trend.”


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted