Demand for risk assets in financial markets continues to shrink with two significant drivers. Firstly, sentiment is undermined by the sustained sell-off in equities that has dominated the week during the US trading session. Secondly, China is not backing down on its ideas to limit the strength of the big technology corporations, while the US court decision bit off some profit from Apple.

The US S&P500 came under pressure during the New York session on Friday, with pressure intensifying towards the close of trading, reflecting the wariness of professional managers. The index is again a couple of steps away from its 50-day moving average. The index has fallen to this line around the middle of each month since May, and each time it finds support on dips there.

However, it is dangerous to rely on correlations in the markets as they break too frequently. It is worth paying attention to the performance of the American stocks near the 50-day average and not deciding for a short-term move before it tests these levels. Consolidation under 4430 could launch a deeper correction towards the 200 SMA at 4100. A pullback from 4430 would focus on returning to the historical highs above 4550 within just a week or two.

That said, the markets have a lot to worry about. Two of the world's largest economies are in sync with pressure on their fintech giants. Access to user data and the growth of ecosystems have effectively created new monopolists that have lately been profiting lavishly from this information themselves and preventing others from doing so. In 2007, the phrase "too big to fail" became widespread as the government bailed out big banks and manufacturing companies. Now we are witnessing a U-turn, with governments intent on raising taxes on corporations and limiting their monopoly in certain sectors or crushing companies that have become frighteningly large for even the US and Chinese governments, the world's two largest economies by a wide margin.

China presses Alibaba to spin off its financial arm, Ant Group, into a separate company with state ownership. Restrictions on the use of user data and the need to share it with the government deprive fintech of an essential competitive advantage, causing a reassessment of the sector.

At the same time, fintech is also under pressure in the US. On Friday, Apple lost a lawsuit with Epic Games and must now allow companies to use payment services to bypass those approved on the Appstore. This will result in a loss of billions of dollars a year in revenue. Investors fear that this could be the start of a big wave of pressure on fintech, which has concentrated control first over user data, then over financial flows, and has already started profiting from this information.

Like Alibaba for China and Apple and Google for the US, those companies may just be too big to be.

Trade Responsibly. CFDs and Spread Betting are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.37% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider. The Analysts' opinions are for informational purposes only and should not be considered as a recommendation or trading advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD gains traction and climbs to 1.1620 after US data

After dropping below 1.1600 earlier in the day, EUR/USD managed to stage a recovery in the early American session toward 1.1620 with the latest data releases from the US making it difficult for the greenback to find demand. US trade deficit expanded in September and durable goods orders contracted. 


GBP/USD stays in the negative territory around mid-1.3700s

GBP/USD recovered modestly from the weekly low it set at 1.3710 earlier in the day but continues to trade in the negative territory around 1.3750. The dollar is staying on the back foot after the latest data releases but the cautious mood is limiting the pair's upside.


XAU/USD needs to crack $1781 for further downside

Gold price extends losses amid resurgent US dollar demand. Market sentiment sours ahead of the critical US macro data. Falling US Treasury yields could help put a floor under gold price.

Gold News

Shiba Inu price to provide buy opportunity before SHIB doubles again

Shiba Inu price is due for a retracement after rallying 113% in less than three days. The MRI displays a major sell signal, hinting at a correction that could extend 17%.

Read more

Bank of Canada Rate Decision: Inflation prospects headline policy review Premium

The Bank of Canada is expected to continue tapering its asset purchases and maintain its current rate posture when it concludes it meeting on Wednesday at 10:00 am EDT. Overnight rate projected to be unchanged at 0.25%.

Read more