Monday market minutes: grin and bear it

Friday’s late bounce was enough to put a smile on some dials in the markets but not enough to halt what was another weekly loss – the sixth in a row.

The impact of the brutal sell downs early in the week, on top of the sell-offs the previous Thursday and Friday, left markets wondering what lies ahead this week.

Eurozone shares rose 2.3% on Friday and the US S&P 500 rose 2.4% as shares bounced from oversold levels helped by Fed comments that bigger rate hikes (0.75%) are not on the table for now while the pains in the crypto market eased a little and prices steadied, then rose.

The positive global lead saw ASX 200 futures rise 54 points, or 0.8%, pointing to a positive start to trade for the Australian share market later this morning.

The threat of a US recession has increasingly added to the fears of investors who are being whacked by the fallout from rampant inflation, coronavirus lockdowns in China and the still continuing ripples from Russia’s invasion of Ukraine.

World indexes are showing their longest weekly losing streak since the middle of 2008, in other words before the terrible selloff when Lehman Brothers collapsed on September 15, 2008 and set off the GFC-proper,

On top of all this the rapid slump in the world of cryptocurrencies, stablecoins and the like has investors large and small wondering if a new round of market disasters lies ahead.

Elon Musk certainly read the room right in placing a temporary hold on his ambitious $US44 billion bid for Twitter.

That decision managed to steady the slump in the price of his main asset, shares in Tesla, which was probably the reason for the Twitter decision.

While Twitter shares ended down nearly 10% at $US40.92 and down more than 18% for the week, Tesla shares rose 5.7% to $US769.59 on Friday which trimmed the week’s loss to 11%.

Still the size of Friday’s rally has given some hope that the bottom may have been reached last Wednesday and Thursday – for the time being at least.

The Dow rose 466.36 points to 32,196.66, or 1.47%. The S&P 500 added 2.39% to close at 4,023.89 and the Nasdaq jumped 3.82% to 11,805.

The S&P 500 on Friday had its best day since May 4, while the Nasdaq posted its strongest one-day gain since November, 2020.

Despite Friday’s good gains, the Dow closed down 2.1% and posting its first 7-week losing streak since 2001. The S&P 500 fell 2.4% and hit its longest weekly losing streak since 2011, while the Nasdaq slipped 2.8%.

For the week, Eurozone shares were up 1.4%, Japanese shares down 2.1%, Chinese shares up 2% and Australian shares down 1.8%. Bond yields pulled back from their highs and metal and iron ore prices fell but oil prices rose.

Worries about global growth also dragged the $A down as the $US rose. The Aussie ended the week just above 69 US cents and doing its usual trick of absorbing much of the pressure from offshore nervousness and selling.

Crypto steadied after Tether, a key stablecoin regained the so-called ‘peg’ of $1 – despite seeing a reported $US3 billion redeemed in 24 hours. Bitcoin rose 4.3% to $US29.800.33 at 7am Saturday and other coins also made small gains.