by | Oct 6, 2022 | Newsletters

While the war in Ukraine continues into its 9th month, the central bank is on a mission to curb runaway inflation between 8 and 9 percent, and it still has a lot of catching up to do. 

On September 21, the Federal Reserve hiked interest rates by another 75 basis points. That number was expected and therefore would have been priced into the market. 

However, the S&P 500 stumbled as Federal Reserve Chairman Jerome Powel spoke after the monetary policy meeting. The broad stock market index fell by 3.25 percent on the day. Fear of a recession still remains, and many analysts point to the global markets indicating a widespread phenomenon. 

1-year chart of returns of the S&P 500 index

Source: TradingView

Over the past month, the S&P 500 has lost 8.40 percent and is down 25.13 percent YTD. This kind of performance is typical of a stock market betting on more economic contraction in the months ahead. The global stock market has fallen also, in line with US stocks, and YTD is down 26.42%.

Gold Shows Resilience 

Precious metals have been more resilient to the stock market shocks so far. Gold in particular has managed to contain the selloff falling by 3.07 percent over the past month. And although YTD gold is still down 9.17 percent, it has managed a small comeback over the past 5 days, rising 2.37 percent.

Russia has continued to increase gold reserves, and hoard the precious metal in what some say is an attempt to finance the war in Ukraine and decouple from the US dollar as a reserve currency. Russia’s central bank gold reserves now stand at $640 billion in gold, according to Forbes.  

Once again gold proves to be resilient against stock market shocks, high inflation, and economic contraction. The price of gold may continue to struggle more so due to the strength of the US dollar. However, it still remains for many aspects a safe haven asset.

Crude Oil Regains Ground

Crude oil is another asset that has maintained most of its price appreciation from the beginning of the year. Although its price is still way off the highs seen in March, crude oil is still up 10 percent YTD. While most of that performance has come in the last 5 days, where it has gained 5.05 percent.

Previous rumors about OPEC+ cutting back on production have continued to arise. OPEC+ members meet in person for the first time in two years on Wednesday the 5th.  WTI crude oil hit a recent low last week at $76.01 before rebounding to $82.80 as traders bought into the possibility of production cuts.

OPEC+ will only make the final decision at the end of their talks in Vienna. However, analysts see the possibility as highly likely since central banks worldwide are enacting tightening monetary policy and causing economies to contract. 

According to Bloomberg, delegates at the meeting will discuss reducing output by 1 million barrels daily. Shrinking economies would result in lower demand for crude oil and a justifiable action would be to implement cuts in production to maintain crude prices.

Cryptocurrencies Continue Their Struggle

The crypto winter seems to be continuing into the fall as the main crypto coins follow the fate of the broader stock market. Higher interest rates are pushing stocks down, and it’s having the same effect on cryptos.

While we once believed that cryptos could act as protection against inflation and stock market shocks, it seems not to be holding its ground this time around. However, some altcoins have performed better than Bitcoin and Ethereum, if only slightly.

Over the past month, here’s how some of the top cryptos have performed:

  • Bitcoin: (-4.12%)
  • Ethereum: (-18%)
  • Cardano: (-7.8%)
  • Binance: +2.7%

One of the major altcoins to buck that trend has been BNB, the Binance exchange token. 

BNB has managed to gain 2.7 percent over the past month despite the general bearish tone of the other major cryptocurrencies. And just under 1 percent of that increase has come in the past 5 days. 

Wrapping Up

We have had another month of volatility in the stock market after a slew of missed earning reports, and the trend seems likely to continue. So, the current bear market for stocks doesn’t seem to be coming to a turning point any time soon. 

With that in mind, instead of putting all your new investments into more of the same, it might be time to diversify your portfolio with precious metals, altcoins, and annuities. You can also make use of the services of some of the best companies offering investment advice. You can read their reviews here.

 

Gino D'Alessio

Gino D'Alessio is a Broker/Dealer with over twenty years experience in various OTC markets such as Bonds, FX and Derivatives. Currently a Financial Markets and Investments Writer & Analyst