Stockmarkets shrug off turbulence
Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
The rampage of the Reddit bulls has made more conventional investors take cover. America’s S&P 500 had its worst week since October, closing down 1.9% last Friday. Perhaps most tellingly, the CBOE VIX volatility index, the stockmarket’s “fear gauge”, registered its biggest weekly gain since June last year. The index had stayed beneath 25 for most of the period since Biden’s election victory, but finished last week at 32.4.
For many institutional investors, the spectacle of “retail investors piling into particular stocks” and pushing prices to absurd levels brings back uncomfortable memories of the dotcom bubble, says Rupert Thompson of Kingswood. The drama helped global shares lose almost 4% last week, erasing their gains for the year so far.
The “skirmishes” between hedge funds and Reddit’s “vengeful legions” may have seized the headlines, but financially speaking the whole thing is a rounding error, says Cormac Mullen on Bloomberg. The shares being shorted in the likes of GameStop and other hedge-fund targets amount to “less than 0.001% of the $43trn stockmarket”, according to figures from Barclays. Yet with US equity valuations so high, anything that makes people forget their “greed and fear” and consider “prudence” is salutary.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Markets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains. China’s CSI 300 is up by 4.4% so far this year, while America’s S&P 500 has climbed more than 3.5%. The major laggard has been Europe, where Germany’s DAX has gained just 0.7% for the year. After a strong start the FTSE 100 is marginally down. Therein lies opportunity: British stocks, as MoneyWeek often points out, are trading at a discount to their global peers, and are worth scooping up.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
More pensioners dragged into 60% tax trap – could you be caught?Frozen thresholds are pushing more older workers into paying income tax at levels much higher than the headline rate, new figures show. We look at why and how you can avoid being caught in the 60% tax trap.
-
Higher earners face £377 bill if Reeves puts up income tax – do you fit the Treasury’s definition of ‘working people’?Labour’s election manifesto pledged not to raise National Insurance, VAT or income tax but prime minister Keir Starmer appeared reluctant to repeat the promise this week
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Cash in on the vast growth potential of the companies electrifying the worldOpinion Martin Todd, portfolio manager, head of sustainable equities, Federated Hermes, highlights three electrification companies where he'd put his money
-
Galliford Try has firm foundations for strong growthBuilder Galliford Try has a finger in a wide range of pies, notably important work in the public sector
-
Card Factory is a stand-out small-cap going cheapIn a digital world, we still value the personal touch. That’s good news for Card Factory, whose unique business model is suited to weather all economic storms
-
8 of the best smallholdings for sale nowThe best smallholdings for sale – from a medieval cross-passage farmhouse in Taunton, Somerset, to a former farmhouse with an orchard in the Welsh Marches
-
How much gold does China have – and how to cash inChina's gold reserves are vastly understated, says Dominic Frisby. So hold gold, overbought or not
-
How to invest in undervalued gold minersThe surge in gold and other precious metals has transformed the economics of the companies that mine them. Investors should cash in, says Rupert Hargreaves
-
Debasing Wall Street's new debasement trade ideaThe debasement trade is a catchy and plausible idea, but there’s no sign that markets are alarmed, says Cris Sholto Heaton