Weekly Market Update 01 - 07 - 2022 - Worst First Half For The Market In 50 years!

Welcome to your Weekly Market Update

Looking back at the first half of the year, we have seen the worst market performance in 50 years, the main factor being the alarming rate of inflation and the inability of central banks to counteract it so far.

Central Banks forecasts for the year were alarmingly inaccurate, endangering global markets and economies still reeling from the Covid pandemic. Affecting not just equities markets, but Forex, Crypto Currencies and even Commodities. Gold, for example, a safe haven bet for most investors looking to transition away from riskier investments, is not deemed to be a great inflationary hedge, subsequently the price of gold has been declining.

Chart of Gold Price Per oz ($)

Supply chain issues still prove to be a major driving factor for higher rates of inflation, demand for shipped goods are outweighing manufacturer’s ability to get the supply to the market. The ongoing war between Russia and Ukraine has also helped in driving up both energy and food costs, although economists have been quoted that ‘80% of the inflation issues the U.S. has were there before Russia invaded Ukraine’.

A constant catch up game, with many wondering why the Federal Reserve haven’t been much more aggressive in their monetary policy and increase of interest rates, has lead to never ending uncertainty about what lays ahead. Therefore, we have seen the S&P 500 fall as much as 24% from its recent highs, and with many investors and traders (us included) believing there will be a further downturn before a recovery in the markets.

Chart of The S&P 500

This has not been a U.S. only issue, global equities markets have continued to decline at alarming rates, currencies devalued and economies struggling to grow. Many believe this is how things will remain until we start to see central banks and the Fed softening its rhetoric.

However, the markets are expecting a 0.75% increase in interest rates in July with the FOMC meetings going on next week. So we are not out of the woods yet, but history shows us that the market will bounce back, not only that, but bounce back stronger.

Until the next week’s Market Updates…Have a great trading week!

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