In the past month, 15.5% of all Bitcoin wallets slumped into an unrealised loss as the cryptocurrency dropped to the $31,000 level.
Glassnode analysts noted that this sudden flurry of “urgent transactions” amid the latest Bitcoin sell-off, which saw investors pay higher fees, indicates that they were willing to pay a premium to speed up transaction times. Over the last week, the total value of all on-chain transaction fees hit 3.07 Bitcoin. To date, this is the largest recorded in its dataset.
Glassnode’s report noted that “the dominance of on-chain transaction fees associated with exchange deposits also signalled urgency,” a point which further supports the argument that Bitcoin investors were seeking to de-risk, sell, or add collateral to their margin positions amid recent volatility for the market.
Over $3.15 billion in value moved into or out of exchanges during last week’s sell-off. This is the largest sum since the market reached its $69,000 peak in November 2021.
Brooks-Johnson will remain CEO until Rightmove posts its full-year figures in February 2023. The company has said the outgoing chief will help find a replacement to ensure a smooth handover.
Brooks-Johnson joined Rightmove in 2006. He became its COO in 2013, then its CEO in 2017. Previously, he worked as a management consultanr with Accenture and the Berkeley Partnership.
Following the news of Brooks-Johnson’s resignation, shares in the FTSE 100 were down as much as 7.1%.
In a statement, the resigning CEO said, “With Rightmove progressing well on its mission to make home moving easier and our strong trading from 2021 continuing into 2022, I have decided it is an appropriate time to seek a new challenge.”
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
This week we are seeing Q1 earning results from 175 of the S&P 500 companies including big tech results from Microsoft, Google and Meta. Companies like Apple have thrived in the new year and reached all-time record earnings this quarter, continuing to make them an attractive investment for traders.
One to watch will be Amazon’s earnings report. Much like any other online-based service provider and seller, Amazon saw a boost in sales during the last two years due to Covid and lockdown affecting consumer behaviour. However, now that things have settled, recent UK sales reports are showing online sales falling noticeably across the board.
AMZN is currently down 23% from its November 2021 high and investors are keen to see whether their earnings show that things are picking up or slowing down.
Amazon’s 18% stake in electric vehicle maker Rivian last quarter helped “juice” their gains, however, Rivian’s recent struggles surrounding botched price hikes and supply chain issues may affect the big tech’s profitability, as Rivian is now consequently trading at near all-time lows.
Additionally, Amazon’s fuel and inflation surcharge come into effect on April 28th to combat rising prices. Alongside the unionisation situation, it has had to deal with in Alabama and now New York, this may likely affect stock prices.
On the offset, Amazon Web Services has been a key profit driver for Amazon in the last quarter with Amazon’s cloud sales growth hitting 40%.
In any case, investors will need to closely consider Amazon’s earnings in comparison to the other big tech giants to make a decision on their trading.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Netflix’s share price initially dropped close to 20% on the news that it had lost 200,000 subscribers globally during the first quarter. Wall Street had predicted the company would gain 2.5 million subscribers over the period. In the current quarter, Netflix believes it will lose 2 million global subscribers.
Netflix has blamed its sudden drop in subscribers on a range of factors, including increased competition, the cost of living crisis which is leaving households with less disposable income, and the ongoing conflict in Ukraine.
In a statement to investors, the streaming giant said: “Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
Major Forex players are usually financial institutions. For example, they can be banks, hedge funds or money managers. A relatively small part of Forex volume is taken by individuals. They are also called retail traders because they use Forex to make money on trading.
Forex trading is extremely important in today’s world. In fact, it helps to shape business, having effects on the world’s economy. But to benefit from foreign exchange, one needs to apply the right strategy. How to choose it? Let’s consider some of the best options.
If you are looking for a simple yet reliable approach, you should try Trend Trading. As you may grasp from the name, this method requires you to trade in the direction of the existing trend. By the way, trends can be easily defined by the best forex EA 2022 or so-called expert advisors. It’s easy to use them and with their help, you can analyse not only trend direction, but also its duration as well as strength. All you need to know with this strategy is when to exit your current position so that you can lock in gained profits and limit your money losses.
In Position Trader, you’ll have to hold your position over a long period. Depending on the market situation and your skills, it can be from a few weeks to 2-3 years. So this is a long-term approach that requires a macro view. With Position Trading, one should ignore small fluctuations taking place in the market. This approach also relies on analytical data, such as moving averages as they help to determine the best entry and exit positions.
With this method, you need to consider support and resistance. Their levels are basically the highest and lowest ends that currency price hits before going in the opposite direction. Together these two make a so-called bracketed trading range, so that’s the reason why this approach is called Range Trading. And what tools are needed to implement this strategy? You should apply RSI and a stochastic oscillator for defining some overbought and oversold conditions.
As said above, Forex is linked to the global economy. Foreign exchange is largely influenced by world economics. That’s why it’s essential to understand economic news and the impact it may have on currency pairs. With the News Trading method, you can predict both daily market movements and breakouts. In this case, you are supposed to rely on economic calendars and indexes. For example, you must consider CCI or the consumer confidence index as it defines in what direction price will move.
This approach emphasises short-term price surges, so it’s a trend strategy that follows frequent price changes. Of course, small fluctuations may go against major trend directions. That's why Swing Trading requires a limited outlook. You may examine the foreign exchange market every hour or day instead of analysing overall trends. What’s more, you have to take quick action. By the way, traders also should hold their position overnight to benefit from trading.
This is one of the most popular strategies used nowadays. Scalping is ideal for those who are not ready to take big risks. With this approach, you will have to conduct an ongoing analysis of price movements. Scalpers buy and sell currency pairs to shave small profits from each trade. For this purpose, they rely on the spread and collaborate with brokers to have access to lower spreads. They also need to use special tools to conduct technical analysis and recognise patterns, while taking into account economic events.
So what’s the best foreign exchange strategy? It’s hard to give an answer that will be universal for everybody. In this article, we’ve considered some of the best approaches you can try today. It’s completely up to you what method to choose when using Forex. Most importantly, consider your needs carefully. Hopefully, this article will help you succeed in trading.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should buy this week.
The pandemic unearthed many key trends, one being the demand for semiconductors and computer chips.
Part of this demand is due to the versatility of computer chips being used in various sectors including the automotive industry and with 5G rolling out around the world, this momentum will only increase.
Whilst Intel was once dominant in the industry, it has since been surpassed by competitors such as AMD and Nvidia, who innovated quicker and more effectively.
Therefore, investors should consider Intel’s pace of innovation before taking bets on the stock.
Despite this, Intel is hedging on production to Asia being outsourced and has announced plans for a $17 billion production facility in Madgeburg, Germany.
By reducing the competitive edge of production in Asia, Intel is hoping to rediscover its success and market share. However, this will hinge on protecting their market share of existing chips, whilst innovating at the same time. Only then, might Intel stock be attractive for investors.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance is not indicative of future results.
Even if you've never looked into crypto investment yet, this might be the best time to do so. Crypto can now be utilised in such activities, and it is already happening in some regions of the globe. In exchange for services rendered, more businesses are taking cryptocurrencies as fees. You could also use a cryptocurrency trading platform to help you manage your transaction if you are a newbie. Based on this article, Bitcoin Prime is suited for beginners, created by professionals at a trusted crypto outlet and enables rapid signup. Now let’s look at some of the most beneficial crypto tactics and scenarios for holding, which you may follow to boost your venture.
You may set a target selling value. Therefore, you can figure it out, and it's time to sell. To achieve this goal, all you have to do is wait for the rates to stabilise. Whichever the situation could be, one must be conscious that you'll be attempting to obtain the maximum possible market value. You may accomplish this by looking at the price graph of your coin. You may utilise the highest sales price on record as a factor for calculating your objective price after you have located it. After you have traded your cryptos at your desired sale value, you might anticipate prices to fall drastically, requiring you to reinvest your funds. You might just have to wait a long time to acquire your crypto assets for another wave of cryptocurrency trading. So it is best to hold multiple cryptos if you can. You might still draw on your previous knowledge to estimate how low the purchase value could be. You might plan for a time when the sales price is the same as it was before you bought your coins. Examining certain market projections can also help you guess what will happen afterwards. You can also read some credible price prediction articles online.
Whenever it applies to cryptocurrency trading, timing is everything. You must understand when it is preferable to keep or trade your investments. This will essentially define if you generate income or continue to lose money. Investors that wish to improve their prospects may have to wait a while. This is entirely dependent on the value of your coin. It's also a beneficial factor if you acquire a coin that is significantly volatile. You might, at the very minimum, capitalise from the fluctuation without having to wait a very long time. Despite cryptos being often regarded as great investments, you cannot predict whenever the price would be ideal. Remember that cryptocurrency investing is a highly volatile environment, and no one can foretell whether you could profit or end up losing your capital. It's vital to keep a strong financial condition to get through all the waiting time. That means you won't have to withdraw your cryptocurrencies. It is a good idea to have separate funds for the financial crisis rather than withdrawing all your assets prematurely.
You may be bewildered at this point if you want to sell your cryptocurrencies. With some, it involves selling something for more revenue than you spent for the assets. You will have to keep a record as to how much you have spent on your crypto accounts. The amount would be used to determine if you're not able to deal. One should be aware of the pricing, and they'll be the primary consideration in your investment decision.
Follow the option that best suits you. This will only work if it is compatible with your temperament. For beginner investors, holding is reasonable and easy. At the end of the day, the decision is up to you. You can hold your cryptos for as much as you choose and trade them whenever the value goes up while building your crypto portfolio along the line. Whenever it relates to cryptocurrency assets, it is indeed essential to come up with strategies. As a crypto investor, you should be attentive to any threats which you can manage as long as it keeps control over the situation.
In an attempt to be helpful, many traders point newbies towards forums, such as r/cryptocurrency on Reddit, hoping that they will find answers there. But this can actually make the process even more complicated - there is so much conflicting advice that it can feel impossible to know which advice to trust, and which to ignore. More than anything, it is impossible to know which users are telling the truth, and which users are making up fake wins in order to try and build a following.
NAGA founder Benjamin Bilski talks about exactly this in his recent interview with Hackernoon, Any Financial Advice You Can Get Online Should be Taken with Caution.
The key pitfalls for beginner crypto investors are very similar to the pitfalls involved in investing in virtually anything. And one of the main problems with investing is that we often let our emotions control us. There’s even a term for it: emotional investing.
“One challenge for beginners that applies to any asset class might be not understanding how to control emotions, namely fear and greed, and when it might be wise to take profit/cut losses,” says Bilski.
For new investors, this can be easier said than done - especially for those who only have a limited amount of money to invest in, and who first got into crypto because they’d read about the huge gains made by other investors. Realising that investing can be difficult and often involves lots of trial and error can be a difficult pill to swallow.
Another big pitfall - as we touched on earlier - is that new investors will often believe anything they hear because they want it to work. The problem with this is that anyone can use platforms like TikTok and YouTube and say they made millions by investing in a certain coin - but there’s no proof, and there’s no accountability. It can be difficult to tell whether influencers are being incentivised by companies to push a particular coin, and by the time large influencers are exposed, it is often already too late. In fact, this has become such a problem that TikTok has cracked down on crypto, share trading, and finance influencer promotions after it was revealed that scammers were using influencers to dupe investors.
Crypto moves extremely fast, and there’s a steep learning curve. Ultimately, this means that unfortunately, it is not a very beginner-friendly industry. This is exactly the problem that Bilski is trying to solve - and the reason he built NAGA, the social trading platform that has racked up a global community of over a million users.
NAGA is a super app for investing, crypto, and payments. It was founded back in 2015 and has since developed a lot of unique technology that is designed to bring more people into crypto trading while rewarding professional traders.
The key feature of NAGA that has made it so popular is its auto-copy feature - a tool that allows new traders to essentially spy on other professional traders, and to copy from experts. The app is powered by the NAGA Coin, which allows skilled traders to monetise their trading strategies and get payments deposited instantly into their wallets as more copiers follow them.
NAGA’s protocol can be compared to the industry trading version of Facebook. This means that users can essentially leverage the platform for all of their trading needs, instead of having to continuously hop between different platforms. Creating a single account allows traders to get involved with the vast, growing community, hold stocks, participate in events and educational seminars, win prizes, and pay for anything using their NAGA card.
By far, the main benefit for new crypto traders is that the NAGA platform is completely transparent. Instead of guessing who to follow based on who is the loudest on forums, or who has paid the most to advertise themselves, users have access to a fully transparent leaderboard that shows the platform’s top traders, along with the amount of profit they have made, the number of auto-copiers they have, and their win ratio.
The benefit for new traders is clear - they get to copy the trades of experienced traders and then carry on their lives as usual. But at this point, you might be wondering: ‘what’s in it for investors? Why should they share their trading strategies with me?’
Experienced traders, on the other hand, get to benefit from the NAGA Popular Investor Programme. In exchange for sharing their trading strategies with other users on the platform, traders can get paid up to $100,000 per month from the Popular Investors’ fund.
In addition, copiers will pay €1 for each copied trade. Approximately 35% of this will be shared with the trader that they are copying from. This will incentivise traders who usually monetise their audience through email lists, Facebook, or YouTube to bring their audience over to NAGA and get paid directly instead.
Unlike an anonymous platform such as Reddit, an investing super app where everything is combined into a single platform increases accountability between users. Given that the entire premise of NAGA is based around transparency, we can be hopeful that it is a step in the right direction when it comes to reducing the number of crypto scams, which increased significantly throughout 2021.
“I think increasing the general understanding of cryptocurrencies among the public could be the way to minimise risks - in other words, not let risky scams get attention and let good projects prosper and bring value to people around the world,” Bilski told Hackernoon.
Bitcoin was down 1.8% to trade at $48,310. Earlier in the week, the price of bitcoin had surged, passing $49,000 but failing to reach the key level of $50,000. Furthermore, bitcoin is currently down around 30% from its all-time high of roughly $68,000, which it hit in November.
Meanwhile, ethereum, the second-largest crypto by market cap, dropped 2.6% and was trading at $3,917.
It appears that investors are instead moving their focus to smaller crypto assets, with cryptocurrencies such as ripple, cardano, polkadot, dogecoin, and shiba inu increasing by 1 to 5%.
Speaking to Yahoo Finance, Kalkine Group CEO Kunal Sawhney said, “Cryptocurrencies have remained turbulent in the recent past with the most populous crypto-asset bitcoin continuing to hover below the mark of $50,000.”
"The persisting uncertainty in financial markets have severely dismantled the growth prospects for most risky assets including some of the tech stocks and cryptocurrencies," Sawhney added.
As the world watched on, global leaders, scientists and academics convened at the COP26 Summit in Glasgow just weeks ago, as Prime Minister Boris Johnson warned that the “doomsday clock is still ticking” in the effort against climate change. While this enormous undertaking has truly only just begun, traders and investors have no doubt been pricing new commitments into their portfolio management strategies.
All things considered, the path to a greener future is paved with investment opportunities, but this has not necessarily translated immediately to the stock market. Although the first day of trading on the London Stock Exchange following the summit saw some global mining giants take a hit, the FTSE 100 still managed to close the day out up 3.95 points, or 0.05%, at 7351.86. Typically, the markets struggle to account for any long-term view, and this remains the case post-COP26. This is especially the case considering that world leaders have mostly been speaking in terms of “phasing down”, rather than “phasing out” coal.
For this reason, it is not exactly surprising that research* commissioned on behalf of HYCM has shown that only 45% of investors consider sustainable investing to be important to them. Without concrete and robust action to tackle climate change, it is perhaps even less surprising that caution still prevails among investors, with just 19% considering ESG investment to be a savvy investment strategy at present.
So, what exactly is driving this mindset, and what should investors be watching as we transition to a zero-carbon economy?
One potential answer to this question could be that concerns surrounding ‘greenwashing’ are deterring traders and investors from upping their investment in ESG assets. According to that same HYCM survey*, more than a third (38%) said that there is “too much hype” surrounding ESG investing at present.
The question, then, is whether these trepidations are substantiated. The answer is yes and no; while investors are quite right to be sceptical of companies hopping on the green bandwagon with re-branding and lofty environmental claims, they should make themselves aware of genuinely green initiatives.
In the months and years to come, there will be many opportunities for traders and investors in the race to net-zero across many areas. From a growth perspective, in the capital goods area, there is a huge amount of potential in the supply chain for climate solutions. Likewise, the technology field will be a crucial enabler for climate solutions in the long-term, so investors should monitor these opportunities closely.
At the moment, just one third (33%) of the investors surveyed* by HYCM plan to invest (or increase their investment) in green energy such as wind power, water stocks and solar energy in the next 12 months. That said, we can expect these figures to grow in line with changing environmental policy, such as a global carbon tax which would shock the stock market in the future. Green metals, such as copper, aluminium, nickel and lithium could also see gains over the medium term as their demand is expected to increase. Likewise, it is also important to note the fact that alternatives to traditional energy, such as oil, are already proving popular with traders and investors – right now, oil is one of the top traded commodities at HYCM.
Another trend to be aware of is the fact that younger investors appear to be at the forefront of the shift towards net-zero. Compared with the smaller number (45%) of investors who said that sustainable investing was important to them, comparatively, the majority (60%) of younger investors aged 18-34 said that these investments were a priority, indicating a more values-driven approach towards investment.
When compared with other bodies of research, these figures stand up; research from MSCI has also shown that millennials have spurred the growth of sustainable investing throughout the 2010s – specifically, investors contributed $51.1 billion in sustainable funds in 2020, compared to the figure five years ago, which came in at $5 billion.
Traders and investors should expect these trends to stick, and this sunnier outlook will no doubt feed into the corporate mentality, as industry titans like Microsoft and Nike will be keen to establish their ESG credentials. All told, although COP26 may have failed to have an immediate impact on the stock market, the summit has likely set the tone for change over the medium to long-term, and traders and investors should ensure that they are kept in the loop with any policy changes and developments in this area.
HYCM recognises this trend and offers traders exposure to the renewable space through commodities and ESG stocks such as Tesla, and copper, which is expected to be more in demand as we build a greener future.
High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information, please refer to HYCM’s Risk Disclosure.
About the author: Giles Coghlan is Chief Currency Analyst, HYCM – an online provider of forex and Contracts for Difference (CFDs) trading services for both retail and institutional traders. HYCM is regulated by the internationally recognized financial regulator FCA. HYCM is backed by the Henyep Capital Markets Group established in 1977 with investments in property, financial services, charity, and education. The Group via its relevant subsidiaries have representations in Hong Kong, the United Kingdom, Dubai, and Cyprus.
*About the research: The market research was carried out between 5th and 10th November 2021 among 2,000 UK adults via an online survey by independent market research agency Opinium. Opinium is a member of the Market Research Society (MRS) Company Partner Service, whose code of conduct and quality commitment it strictly adheres to. Its MRS membership means that it adheres to strict guidelines regarding all phases of research, including research design and data collection; communicating with respondents; conducting fieldwork; analysis and reporting; data storage. The data sample of 2,000 UK adults is fully nationally representative. This means the sample is weighted to ONS criteria so that the gender, age, social grade, region and city of the respondents corresponds to the UK population as a whole. Within this sample, 857 respondents had investment portfolios worth in excess of £10,000 – this includes all assets from bonds and currencies to commodities and stocks and shares but excludes any savings, pensions or property that is used as their primary residency.
Public companies are traded publicly on the stock market and invested in by the general public. Private companies are owned by individuals or specific shareholders, and shares are not available to the public to purchase. The funding for private companies comes through institutional investors rather than the stock market or the general public.
In recent years, there has been a rise in investors in private markets. The UK private equity investment is currently at its highest level for five years. It has resulted in numerous private companies raising more amounts of capital. Then, they wait longer than usual before going public.
The private sector is considered the engine of economic growth. Among numerous other things, it has contributed to technological advancements in vital sectors. These include transportation and energy – both impacted by the rise in demand for more sustainable businesses. The private sector has also helped to increase life expectancy through innovation in healthcare.
Private markets have structural differences from public markets. While the downside of these differences is frequently discussed - there are benefits as well. Benefits such as these are some of the reasons why more companies are opting to stay private.
Being unregulated can bring significant risks to companies. However, it can also provide significant opportunities. The information about investments is not regulated. There is nothing in place to regulate the forms and structures of either due diligence materials or financial statements.
To succeed, investors must be prepared to collect their own data sets and evaluate opportunities for themselves. There are great opportunities for investors to leverage these market dynamics to their benefit. In addition to this, they can also earn significant financial returns.
Due to the information in the private sector not being regulated, there are opportunities to collect an abundance of accurate information, especially on a niche market. They will then have more information, especially compared to others in their sector, helping to remain one step ahead of competitors in their industry. With this additional information, these companies will have a top-down view of all buyers and sellers, especially those in a particular market. Once they know this, they can use it to invest with a favourable risk or return profile.
For those with extensive knowledge of the rising private market sector, it helps to put them in a great position ahead of competitors. For those wanting to learn more about private market investments and alternative investment management, there are courses available where you can earn a certificate online. Some of these courses focus on investment management and alternative investments. In addition to gaining deep insight into this emerging sector, it can show potential employers or future partners that they are well-versed in alternative investment management.
Many companies choose to stay private to obtain greater control over their business. Remaining private allows the business to stay in the hands of a select few people, including family members. Companies that choose to be private also are not obligated to fulfil the ideas of shareholders.
Private companies are not subjected to the volatility that comes with being a publicly-traded business. The highs and lows of the stock market are an accepted cost of doing business for many investors; however, they can easily become a distraction for the business, which is especially true in instances where employees are shareholders. Without worrying about what the stock is doing and what it could mean for their finances, employees can focus on their jobs, rather than the numbers.
The return of inflation has presented investors with a challenge. Searching for yield should now be coupled with the need to protect against inflationary trends. There are various strategies in private markets that look to be well-positioned to provide that hedge. They could even flourish if higher inflation were to persist. In addition to this, the geographical spread of private-market strategies can help investors diversify across economies at different phases in the inflationary cycle. However, some private-markets strategies are fixed rates with long duration. As such, they may not necessarily underperform in an inflationary environment, especially if actual inflation does not exceed market expectations for inflation.
Private market investing, often used interchangeably with private equity, provides investors with a robust opportunity. Many companies in today’s corporate landscape are staying private for longer. They choose to go public when they are at larger sizes. Due to this trend, more investors are interested in participating in the private markets. These investments require a different mindset and strategy. Here are a few things worth considering before investing in private market investments.
Most private-sector figures follow the rules of the system. However, there is a growing number of entrepreneurs that are choosing not to play by the rules. Instead, they are looking at working to change them. Some are even aiming to transform the purpose of business and the economic system itself. They are looking to help with social and environmental issues. Additionally, working with governments and other stakeholders to advance sustainable development, and transform systems that have led to climate change and unsustainability.
In future, investors should integrate private strategies that operate in less efficient markets. It will help to exhibit more growth and more opportunities to generate dominance. To do this effectively, investors and their advisors must adjust their mindset from seeing alternatives as additional exposure, to viewing them as being core holdings in a portfolio.
The future of the private market sector looks promising. For many companies, now is an ideal time to learn more about alternative investments. Also, now is the time to find out ways to succeed in the private market sector. Taking the time to understand now will help them be ahead of their competition in the years to come.
So far, this year has been anything but typical. As nations have attempted to regain their footing after a difficult 19 months or so, inflation fears and spiralling energy prices have cast a very dark shadow on worldwide economic recoveries.
Even as world leaders prepare to convene for the UN Climate Change Conference of the Parties (COP26), global fossil fuel prices are soaring. While oil prices have hit multi-year highs in the US, with Brent crude sitting at $86 a barrel, the situation in Europe grows grim, as crude and gas have crept up to near all-time highs. As we approach the colder months, where demand for these commodities usually tends to rise in line with changing weather conditions, many traders and investors may be wondering if we are in for a particularly volatile winter. So, what factors should individuals consider when weighing up their investment activities?
One aspect which may exacerbate usual seasonal patterns is the fact that we are currently in a ‘stagflationary’ environment – a deadly combination of rising prices, rising wages, low productivity, low growth, and rising unemployment. No doubt, this will be a pressing concern for investors given recent CPI data, as a prolonged period of inflation may drive central banks to raise their interest rates. What’s more, energy rationing and contracting consumer budgets may also spell trouble for the economy, stifling global growth. The result of all this? Energy prices may pose a road bump on the path to post-Covid recovery.
As such, I would advise traders and investors to watch central bank meetings closely. Not only will the minutes of monetary policy committee meetings give a direct insight into the thoughts of leading economists on these issues, but they will also provide a forecast of where inflation is headed.
At the moment, inflation figures have steadied somewhat in the UK, where the energy crisis originated, to 3.1% in annual terms for September. That said, the newly appointed chief economist at the Bank of England (BoE) Huw Pill has offered some words of caution, warning that inflation figures may top 5% by early next year – which could prove problematic for a central bank with an inflation target of 2%. Now, traders and investors are expecting a potential interest rate rise from the BoE at their next meeting on 4 November. Up until now, the Federal Reserve and the European Central bank are months behind taking such action.
Investors should also consider the fact that, generally speaking, oil tends to have a significant effect on currencies, as it has a strong inflationary component. In effect, this means that any volatility in oil prices will result in serious implications for the FX world. While central figures maintain that, like inflation, the energy crisis is “transitory”, I would still advise investors to keep their ears to the ground for any rumblings about oil.
Additionally, the upcoming COP26 summit on 31 October will contribute to something of a shift where usual seasonal patterns are concerned. Given that the recent energy crunch has marked a turn back to ‘dirtier’ sources of energy like thermal coal and oil, traders and investors can expect world leaders to recommit to old pledges to reduce their carbon emissions and accelerate these plans. While such efforts may seem like a given, the pace at which this transition occurs should provide traders and investors with some more nuance; so too will the inevitable opportunities that come along with an event like this. The summit will likely result in a new push for greener investments – clean energy sources, as well as the technology required to advance, transmit and store it, will provide new avenues to investors. Here, though, it is important to note that investing in any emerging market, and particularly energy, can come with some risks.
While most investors are no strangers to the fact that cold weather conditions tend to result in higher energy prices – particularly in the winter months – worsening weather conditions could exacerbate this trend. At the moment, meteorologists are predicting that the UK is in for a bitter winter, which could result in further gas shortages and supply bottlenecks.
In short, it seems like this year we can expect normal seasonal patterns to be amplified by the energy crisis, as well as other extraneous factors. While none of this is certain as yet, traders and investors should ensure that they anticipate any market shocks.
High Risk Investment Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. For more information, please refer to HYCM’s Risk Disclosure.
About the author: Giles Coghlan is Chief Currency Analyst, HYCM – an online provider of forex and Contracts for Difference (CFDs) trading services for both retail and institutional traders. HYCM is regulated by the internationally recognized financial regulator FCA. HYCM is backed by the Henyep Capital Markets Group established in 1977 with investments in property, financial services, charity, and education. The Group via its relevant subsidiaries have representations in Hong Kong, the United Kingdom, Dubai, and Cyprus.
