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This global sell-off is not the start of a bear market

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This global sell-off is not the start of a bear market

The current global sell-off is unlikely to be the beginning of a bear market, more likely noise that we will forget about soon, affirms the world’s leading independent financial advisory organisation.

The comments from Tom Elliott, deVere Group’s International Investment Strategist, come as global shares fell back on Wednesday, echoing a sell-off on Wall Street prompted by concerns over slowing growth and falling profits.

Mr Elliott states: “U.S. markets have been rocked by bond yields and corporate earning concerns.  This rattled investor sentiment has now rippled across the global markets.

He continues: “Wall Street has been hit by a combination of three key factors.

“First, the U.S. 10-year Treasury yields reaching 3 per cent. This is now quite a decent yield relative to inflation of just over 2 per cent, and cautious investors may switch out of stocks into Treasuries as a result.

“The second reason is growing feeling that the U.S. economy is peaking in its current cycle, echoed today by Caterpiller’s earnings statement that said Q1 would be the ‘high water mark’ for the year.

“Third is a sense that U.S. big tech is facing a storm of different problems, from greater regulation on privacy issues, to lacklustre sales of products, and perceived political vendetta by the Trump administration towards some firms, such as Amazon.”

Mr Elliott concludes: “Despite this current global sell-off, this is unlikely to be the beginning of a bear market. It is more likely noise that we will forget about soon.

“Fundamentals of strong corporate earnings growth, possibly growing over the coming 12 months thanks to Trump’s tax cuts, is very supportive.”

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Bitcoin set for worst week since March as riskier assets sold off

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Bitcoin set for worst week since March as riskier assets sold off 1

By Ritvik Carvalho and Tom Wilson

LONDON (Reuters) – Bitcoin was headed on Friday for its worst week since March as a rout in global bond markets sent yields flying and sparked a sell-off in riskier assets.

The world’s biggest cryptocurrency slipped as much as 6% to $44,451 before recovering most of its losses.

It was last trading down 1% at $46,671, on course for a drop of almost 20% this week, which would be its heaviest weekly loss since March last year, when fears over the novel coronavirus caused havoc in financial markets.

The sell-off echoed that in equity markets, where European stocks tumbled as much as 1.5%, with concerns over lofty valuations also hammering demand. Asian stocks fell by the most in nine months.

“When flight to safety mode is on, it is the riskier investments that get pulled first,” Denis Vinokourov of London-based cryptocurrency exchange BeQuant wrote in a note.

Bitcoin has risen about 60% from the start of the year, hitting an all-time high of $58,354 this month as mainstream companies such as Tesla Inc and Mastercard Inc embraced cryptocurrencies.

Grayscale’s Bitcoin Trust, which has seen huge inflows amid the heightened interest in cryptocurrencies and manages almost $33 billion in assets, was down 5.5% versus its previous close at $45.63.

The Purpose Bitcoin ETF, which became this month the world’s first exchange traded fund physically settled by bitcoin, last traded at $7.41 versus a net asset value of $9.36.

Its stunning gains in recent months have led to concerns from investment banks over sky-high valuations and calls from governments and financial regulators for tighter regulation.

(Reporting by Ritvik Carvalho and Tom Wilson; editing by Dhara Ranasinghe, Karin Strohecker, William Maclean)

 

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Sterling knocked back by bond rout and inflation fears

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Sterling knocked back by bond rout and inflation fears 2

By Joice Alves

LONDON (Reuters) – Sterling fell against a stronger dollar on Friday, retreating from a three-year high touched earlier this week, as a rout in global bond markets sent yields flying and hurt the pound, while the Bank of England warned of inflation risks.

After rising above $1.42 for the first time in three years earlier this week, the pound fell to $1.3890 at 1059 GMT, its lowest since Feb. 18..

Versus the euro, the pound fell 0.1% 87.03, after hitting a 10-day low of 87.30 pence in earlier trading..

Bank of England Chief Economist Andy Haldane warned on Friday of a risk that inflation will prove difficult to keep under control as the economy recovers from the pandemic.

Analysts also attributed sterling’s fall on Friday to a sell-off in bond markets.

Benchmark U.S. Treasury yields vaulted to their highest since the pandemic began, driven by the prospect of accelerating growth and inflation that could trigger a faster rise in interest rates than many expect. Gilt yields also rose sharply on Thursday.

“The aggressive Cable capitulation has seen macro and leveraged players retreating from an increasingly overbought market,” said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.

“The correction came as the UK curve 2-10 flattened by 2bp yesterday and short sterling rallied into the close”.

The pound has strengthened about 2% this year as traders expect Britain’s speedy vaccine roll-out will help the economy rebound from its biggest contraction in 300 years.

Relief over a Brexit trade deal and pushed back expectations for negative interest rates from the Bank of England had also supported sterling.

Sterling was still on track for its fifth consecutive month of gains against the greenback and the euro, with analysts maintaining a positive outlook on the currency.

Sterling knocked back by bond rout and inflation fears 3

(For graphic of Sterling monthly performance – https://fingfx.thomsonreuters.com/gfx/mkt/oakperraqvr/Sterling%20monthly%20performance.png)

(Editing by William Maclean)

 

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GameStop’s stock rises in early deals, set for second best week

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GameStop's stock rises in early deals, set for second best week 4

(Reuters) – Shares of GameStop Corp jumped 10.6% in early deals on Friday, as retail investors pushed up the stock in a renewed rally that could see it clock its second best week.

Options market activity in the stock, which has returned to the top of the lists in a social media driven retail trading frenzy, suggested investors were betting on higher prices or higher volatility, or both.

GameStop shares touched $120.09 in premarket trading. Its shares are set to triple this week, if gains hold. Further support could come from holders of options on the GameStop stock, as a big batch of those weekly contracts mature on Friday.

The stock is still some distance away from the $483 hit in January as battered hedge funds that had bet against the video game retailer were forced to cover short positions when individual investors using Robinhood and other trading apps pushed the stock higher.

Refinitiv data on options showed retail investors have been buying deep out-of-the-money call options, which are options with contract prices to buy or sell far from current prices.

Many of those options deals are set to expire on Feb. 26, and would mean handsome gains for those betting on a further rise in GameStop’s stock price.

Call options which would be profitable for holders if GameStop shares reach $200 and $800 this week have been particularly heavily traded, the data showed.

Meanwhile, GameStop’s Frankfurt listing shed 21.3% to trade at 98.19 euros, in a move that almost entirely saw its value converge with that of the U.S.-listed stock, which added nearly a fifth in value on Thursday.

(Reporting by Aaron Saldanha in Bengaluru; Editing by Shinjini Ganguli)

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