Investing.com – Top 5 things that rocked U.S. markets this week.
Volatility Awoke From Slumber To Wipe Trillions Off Global Markets
Global equities came under heavy selling pressure this week, losing as much as $6 trillion in stock market capitalization as investors fled risk assets amid a spike in bond yields, while a shake-up in volatility-sensitive securities triggered a jump in volatility.
The selloff was characterised by a sharp move higher in the so-called fear index VIX as market participants using financial instruments such as XIV ETN, - to place highly leveraged bets against rising volatility - were caught off-guard after volatility awoke from its slumber rising to levels not seen since 2015.
Others, however, pointed to the rise in US bond yields as a reason for the selloff, claiming that higher bonds yields would go head-to-head with equities, competing for a larger chunk of investors’ portfolios.
The Dow Jones plunged nearly 1,600 points on Monday, recording its biggest ever points drop, but staged a late comeback Friday to close 330 points higher, offering a sliver of hope for the bulls, despite a 5% loss for the week.
Some said the late stage comeback in equities Friday was triggered after the S&P 500 fell below its 200-day moving average of 2,538.9, attracting technical support.
No Where To Hide: WTI Crude Saw Biggest Weekly Slide Since November 2016
Crude oil prices settled at its lowest since November 2016 after a deluge of recent data reaffirmed investor expectations of rising US output which threatens to derail efforts by major oil producers to rein in excess supplies.
The number of oil rigs operating in the US rose by 26 to 791, the highest level since April 2, 2015, according to data from energy services firm Baker Hughes.
The Energy Information Administration, meanwhile, released Wednesday its weekly inventory totals showing both US crude and output rose.
On Friday U.S. crude futures fell 3.9% to settle at $59.20 a barrel.
Bank of England Rate Hike Talks Not Enough To Save Sterling From Slide
The Bank of England stood pat on interest rates Thursday but signalled it may need to raise rates earlier than expected to curb the rapid pace of inflation.
The dollar, almost immediately, came under pressure as sterling rose 1% but gains proved short-lived as the greenback recovered sharply confining sterling to both a second straight weekly loss and the steepest fall since October.
GBP/USD fell 0.65% to $1.3821.
Gold Fell To Rising Dollar, Bond Yield Pressure For Second Straight Week
Soaring bonds yields and a rising dollar pressured gold prices to its second weekly loss. The yellow metal fell to about $1,315 an ounce from its weekly high of about $1,349 an ounce.
Sentiment on gold prices appeared to have turned sour as data CFTC COT data showed money managers cut their long bets on gold for the second straight week.
Crypto Fell. Fell Some More. Eventually Rebounded
Not be outdone by wild moves in equities, cryptocurrencies staged a roller-coaster ride of their own as bitcoin fell as much as 36% to a low of $6,000 before setting off on a rally above $8,000.
The move higher appears to be backed by new inflows into the market as the total cryptocurrency market cap at $420 billion, at the time of writing, rose nearly $100 billion from the lows seen at the depths of the tumble Monday.
Yet it remains to be seen whether the new entrants will continue to stay loyal to the “hodl” as total crypto market cap remained well below its early January peak of roughly $829 billion.
Bitcoin fell roughly 1.40% to $8,555.8 over the past seven days, while Ethereum, the second largest cryptocurrency by market cap, fell 4.95% to $859.78 over the past seven days.
Ripple XRP, meanwhile, rose 6.95% to $0.89077, over the past seven days.