Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance Find Stocks Now
The Dual Nature Of Markets In 2020
www.investing.com/analysis/the-dual-nature-of-markets-in-2020-200530496/
The Dual Nature Of Markets In 2020
By FxPro Financial Services Ltd (Alexander Kuptsikevich) | Jul 13, 2020 06:44AM ET Stock markets remain in the phase of the economic cycle, where the main driver is interest in "growth stories". The total capitalization of FANGMAN stocks (Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA)) exceeds $7.1 trillion. The capitalization of Tesla (NASDAQ:TSLA) exceeds $285 billion, and the fortune of its founder, Elon Musk - $70.5 billion, making him the 7th richest man on the planet. These are all companies that are of interest to investors in times of rapid economic growth, and their particularly sharp growth often occurs at the end of this macrocycle phase.
The foreign exchange market is much more restrained. The leaders of growth against the dollar since the beginning of the year are Swiss franc, Swedish krone, and Japanese yen. However, their increase is not even 3%. There is a much longer list of those currencies that have been seriously affected since the beginning of the year. Among them the Brazilian real (-25%), South African rand (-16.5%), and Mexican peso (-15.6%).
For the most part, the current picture of the currency market correlates with the situation around the coronavirus. Countries that were not included in the hot spot lists, as well as those that managed to provide an organized exit from quarantine, enjoy interest from buyers.
However, thefranc, yen, and euro may well strengthen against the dollar if the situation with COVID-19 in the U.S. remains alarming. In this case, the Fed and the U.S. government will continue to pump the economy with dollars, which will reduce their value.
In fact, at the expense of such a policy, the U.S. artificially creates a model of economic boom, when money is cheaper compared to the prospects of economic growth. Dollars printed by the Fed and distributed by the U.S. government are used to buy stocks, among which a number of high-profile names are chosen.
It should also be noted that the interest in stocks is accompanied by the strengthening of gold. Seemingly in an attempt to insure against the declining dollar value. Gold and a number of other similar instruments can not meet the demand of all those who want to save capital from the loss of purchasing power of the dollar.
This boom in the American high-tech market also has a secondary effect that is positive for Americans: products and services are becoming more competitive in the world market due to the weakness of the dollar, but companies have more and more capital to expand.
This means that if the U.S. currency weakens, U.S. policymakers won't worry about it for a long time, opening the door for potential depreciation not only against the franc and yen but also against the euro and several other currencies. As for the stock market, the current division is likely to remain in place. Some companies make an adequate assessment of markets based on prospects and multipliers, whereas the capitalization of others is getting higher and higher because of the extremely favorable attitude towards them from investors.
The FxPro Analyst Team
Related Articles
A Trillion (Dollar) Reasons Why Yellen Is the Policymaker to Watch...
By Alfonso Peccatiello - Apr 25, 2024
Here is a trillion (dollar) reasons why the US economy is likely to hold up until elections: between now and then, Yellen is likely to drain the Treasury General Account (TGA) and...
10-Year Yield on Cusp of Breakout as All Eyes Turn to PCE, GDP Data
By Michael Kramer - Apr 25, 2024
Stocks finished flattish on the day, but we are moving into the busiest part of the week. Now that Meta’s results are out of the way, we will have GDP and PCE to finish the...
Is Agriculture ETF Ready to Break Out and Send Bearish Message to...
By Chris Kimble - Apr 24, 2024
1
To be successful, active investors have to watch (and create) indicators that the mainstream media do not follow.Trading is hard, requiring discipline and a strict set of...
The Dual Nature Of Markets In 2020
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.