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The NASDAQ vuilding, nasdaq and S&P 500 reached record highs as GDP data came in

Markets Continue to Digest the Latest Fed Minutes: NASDAQ Falls to 3-Month Low, Crypto Selloff Continues & The Yen Strengthens

Dow Jones drops, whilst NASDAQ bounces from a 3-month low

U.S. indices were lower to start this week’s session, as markets continue to digest the latest Fed minutes, and Friday’s disappointing jobs report.

Both the Dow Jones and NASDAQ were in the red for the majority of Monday’s session, as many now expect the Federal Reserve to hike rates as soon as March.  However, the NASDAQ recovered from a 2% loss to end the day up a modest 0.05%.

This comes after last week’s FOMC minutes showed that the Fed was considering an earlier than expected hike.

News of this follows Friday’s disappointing Non-farm payrolls, which saw 190,000 added to the U.S. economy, versus expectations for a 400,000 increase.

The Dow finished the day down 0.45% while the S&P 500 fell a more modest 0.14%.

Cryptocurrency selloff continues to start the week

Monday’s bearish sentiment transcended stock markets, with cryptocurrency prices also trading lower to start the week.

The world’s largest crypto, Bitcoin, fell below $40,000 for the first time since September 22nd, BTC rebound above $40,000 but continues to be down over 2.30% to $41,500 extending recent losses.

💡 Bitcoin’s “death-cross”
The Fed’s minutes have been brutal for cryptos as investors look to move away from risky assets, so when fears of a hawkish fed gripped crypto markets Bitcoin prices tumbled toward the “death-cross”, a bearish indicator that appears when the 50-day moving average (MA) dips below the 200-day MA. Generally this means we can expect bearish run.

However, death crosses witnessed last June, late March 2020 and October 2019 were bear traps, or false signals that marked major price bottoms. The consolidation seen after the mid-June death cross resolved in a fresh bull run

Prices of Ethereum were also trading in the red, with ETHUSD hitting an intraday low of $2,933.

ETH has been down close to 20% over the last 7-days, with BTC losing about 11% of its value over that same period.

As of writing, the overall crypto space was trading 3.52% lower.

Yen stronger, as IMF issues emerging markets warning

On Monday, the IMF issued a warning to emerging markets to prepare for an interest rate hike from the Federal Reserve.

The group believes that a faster than expected rate hike could greatly impact emerging markets, who have only just begun to recover from the pandemic.

💡 More on this
One of the key factors to this was the fact that job vacancies also rose, hitting a new high of 1.3 million in the quarter.

They went on to add that, “Faster Fed rate increases could rattle financial markets and tighten financial conditions globally. These developments could come with a slowing of U.S. demand and trade and may lead to capital outflows and currency depreciation in emerging markets”.

USDJPY, which is seen as a safe haven currency, fell to an intraday low of 115.04 on the news. 

“You have to identify your weaknesses and work to change. Keep a trading diary – write down your reasons for entering and exiting every trade. Look for repetitive patterns of success and failure.”

– Alexander Elder

Eliman Dambell

Senior Market Analyst