Interest in risk and the first major bankruptcies in the USA

Finans ve emtia piyasaları analizleri

Market Watch review. 31.03.2021

In today's release, we’ll cover the following topics:

  • Investors believe in the growth of the US stock market. 
  • Investment fund collapse. 
  • Bitcoin is ready for new records. 

I will start today's review with the rather optimistic results of the survey of the American Association of Individual Investors. According to them, almost 51% of individual investors believe that the stocks will grow in the short term, compared to the historical average of 38%. As a result, 50% of all assets owned by households, unit investment funds, and pension funds are stocks.

Of course, such interest in the stock market has already had an incredibly strong impact on their value. The S&P500 has gained more than 80% in the past 12 months, while the Nasdaq 100 has gained almost 110% in the same period. One of the main drivers of growth remains the policy of the US Federal Reserve and unprecedented amounts of stimulus. Simply put, with the support of the Federal Reserve the US government floods the economy with conditionally free money, thereby providing strong support to the stock market.

But even in a growing market, not all leveraged investment funds manage to stay afloat. So back on Friday, a large sale of shares began by investment banks Goldman Sachs, Morgan Stanley and Deutsche Bank, which belonged to the investment fund Archegos Capital. We are talking about a package of shares worth more than 30 billion dollars. 

Despite a fairly large volume of sales, the main US stock indices are trading steadily, which means that there is still no panic – this is good news. Nevertheless, it remains good until the next major drop appears. After all, no one denies the fact that only record amounts of financial incentives in the United States keep the markets from a global collapse.

And now let's move on to the cryptocurrency market. This week is off to a pretty good start. Bitcoin resumed its growth, reacting to a message from VISA about the first cryptocurrency transaction in the Ethereum blockchain. The rapid introduction of this feature to the masses can have a longer-term effect on the cryptocurrency market, contributing to the growth of major coins and bitcoin in particular. After all, in this case, the infrastructure of cryptocurrencies is significantly expanding.

To finish today's release I would like to mention the upcoming publication of German unemployment data, Canadian GDP and US oil reserves. Each of the noted publications may have a noticeable impact on the market only if there is an unexpectedly strong deviation from the previous and forecasted values. Therefore, trading activity could still remain moderate.

Closely monitor the news background and be prepared for all the surprises of the market.