Weekly Analyst Update — March 22nd

Wall Street turns red after all-time highs

• All three major US stock indices lost ground last week after both the DJ30 and SPX500 reached fresh all-time highs.
• The majority of the SPX500’s 11 sectors didn’t move beyond a percentage point in either direction from a weekly perspective.
• Energy was the major outlier, tumbling 7.7% on the back of a significant decline in the price of oil.
• Financial stocks also fell back last week, despite the Federal Reserve upgrading its outlook for the US economy.
• The DJ30 fell by 0.7% on Friday taking it into negative territory for the week.
• A decision on Friday from the Fed to not extend temporary capital requirements relief hurt bank stocks at the end of the week. JPMorgan, Goldman Sachs, Morgan Stanley and other major banks fell back on the news.

Oil tumbles on demand concerns

• Oil prices declined steadily last week, with a major singled-day drop of 9% on Thursday.
• One possible cause is that Wednesday’s Crude Oil Inventories report showed stockpiles were at their highest since early December.
• More importantly, the IEA estimated that global oil demand could take two years to return to pre-crisis levels.

Cryptos recover after correction

• After falling to $53K earlier in the week Bitcoin climbed back above $58K, then corrected slightly.
• More banks and institutions recently announced their strategic moves towards crypto markets: Morgan Stanley’s wealth management unit will offer its clients exposure to three BTC funds, adding a 2.5% allocation to Bitcoin in a traditional portfolio consisting of 60% equities and 40% bonds.
• In addition, Crypto.com has expanded its Debit Card to Australia, after becoming a Visa Principal Member and 115 new Bitcoin ATMs are going live across 24 US states via Bitcoin Depot.
• Interestingly we saw a pop in Bitcoin price following comments from Fed Chair Jerome Powell during his press conference last week, saying that the Fed sees inflation rising above 2% this year and that their expectation is still for interest rates to stay close to zero at least through 2023.

The Week Ahead

• Fed Chair Jerome Powell to participate in a virtual panel discussion about central bank innovation (today).
• Powell and Treasury Secretary Yellen to testify on the quarterly CARES Act report (Tuesday and Wednesday).
• Swiss National Bank Monetary Policy Assessment (Thursday).
• BOC Governor Tiff Macklem and BOE Governor Andrew Bailey to participate in a virtual panel discussion at an online event hosted by the Bank for International Settlements (Thursday).
• Euro Summit (Friday).

Written by a team of experienced financial analysts at eToro.

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.