Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Yen Shines As Stock Market Sell-Off Deepens

By XM Group (Trading Point )Market OverviewJan 21, 2022 05:37AM ET
www.investing.com/analysis/yen-shines-as-stock-market-selloff-deepens-200615479
Yen Shines As Stock Market Sell-Off Deepens
By XM Group (Trading Point )   |  Jan 21, 2022 05:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • US stocks erase early gains to close negative, falling yields don’t help
  • Yen advances as risk aversion intensifies, oil succumbs to gloomy mood
  • Dollar choppy, Netflix (NASDAQ:NFLX) disappoints, US-Russia meeting in focus


Selling snowballs

The stock market just can’t shake off the blues. Wall Street took another sharp hit yesterday as investors continued to unload riskier assets and rotate into safe havens to insulate their portfolios from any further downside.

All this mayhem started with worries around the Fed raising interest rates at a faster clip, but that’s no longer the driving force. Treasury yields have been falling for most of the week as traders hedge risk and yet, equities keep bleeding. Hence, there is no clear catalyst behind the selloff anymore aside from the fear of further selling itself.

This is the type of move you would expect to see when market participants are worried about something huge, like a Russian invasion of Ukraine, not the Fed trying to raise rates into a solid economy. But if that was the case, oil and gold prices would be going berserk, which hasn’t really happened.

Ultimately this is good news. As long as yields are stable or retreating, that will help cushion the stock market from any brutal losses. It can always get uglier, but without a clear narrative behind the shellacking anymore, bargain hunters could soon emerge to take advantage of the deepening discounts in many quality names.

Yen shines as yields retreat

In the FX spectrum, the defensive Japanese yen has been the clear winner this week, capitalizing on all the risk aversion and the pullback in global yields. The US dollar has been choppy in recent sessions but is still headed for solid weekly gains against the euro and sterling, both of which tend to underperform in periods of market stress.

The sour mood has also left its marks on the New Zealand dollar
, which is currently testing multi-month lows despite money markets pricing in a rate increase by the Reserve Bank in every single meeting this year and fresh stimulus measures in China.

The Canadian dollar has performed much better than its commodity cousins, helped by speculation that the Bank of Canada will expedite its normalization plans and raise interest rates next week. The final piece of this puzzle will be the retail sales numbers that will be released today.

Oil pulls back, geopolitics in focus

Meanwhile in energy markets, oil prices have rediscovered the gravitational pull of risk sentiment, erasing all their gains for the week to trade lower instead. It seems that crude cannot ignore the havoc in stocks for too long, although geopolitical factors could also be at play.

The top diplomats of the United States and Russia will meet today for the second round of negotiations to de-escalate the crisis around Ukraine.
Whether these talks bear fruit could be crucial for traders trying to price geopolitical risk into assets such as crude oil and gold, as the rhetoric has become more heated lately with President Biden warning of a ‘heavy price’ if Russia invades.

There isn’t much else on the economic calendar today. Instead, markets will turn their gaze to next week’s events, which feature central bank meetings in America and Canada.

Finally, it is worth noting that Netflix shares are lower by a stunning 20% in premarket trade after the streaming giant warned of a slowdown in subscriber growth during its quarterly earnings call.

Yen Shines As Stock Market Sell-Off Deepens
 

Related Articles

Yen Shines As Stock Market Sell-Off Deepens

Add a Comment

Comment Guidelines

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.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
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
Continue with Google
or
Sign up with Email