For the third trading session in a row, FAANG stocks and several other companies have been experiencing a hard landing after a flying sky-high in recent months. Tesla has been hit particularly hard. The price of its shares collapsed by more than 20%, the sharpest one-day drop in the ten-year trading history of this stock.

The price peaked on the 1st September when post-split quotes were above $500, but by the end of the day yesterday they were settled just under $330. However, it should be noted that the seemingly extreme sale at Tesla took the company's capitalisation to levels of just a month ago, despite the more than 34% crash so far this month.

It is worth paying attention to the dynamics of competitors. For example, Ford share price, a favourite of American retail investors, added almost 2% against the background of a general decline in the markets. General Motors jumped by 8% on reports of the purchase of a share of another manufacturer of electric cars, Nikola. The value of the latter soared by 40% overnight.

The recent collapse of oil prices is in favour of traditional car companies. Fears of overstocking in the foreseeable future have returned to the market. This is good news for manufacturers of internal combustion engines, as it helps maintain demand for their more powerful and more expensive cars due to cheaper petrol.

On Wednesday morning, there is a slight rebound in the American indexes, which somewhat alleviates the degree of anxiety. The case of rising value stocks versus falling growth stocks allows us to regard current market movements as an extreme portfolio rebalancing rather than a complete risk-off in the markets for now.

The steady growth of the dollar since the beginning of the month does bring back to the agenda the idea that technology stocks are just the first steps on a broader market sale. This hypothesis is supported by severe movements in the GBPUSD pair, which plunged to 1.2930, losing 1.6% overnight. EURUSD traded close to the August low at 1.1750. A drop below this may signal a broader correction in global markets, putting at risk not only a few of the heroes of the recent mega-rally but also a wider range of assets.

Like the Euro, gold also nears its essential support from August, the $1900 level. A steady move below may be a warning sign of a broader elimination of risk positions and a move into a phase of poorly controlled decline.

Disclaimer

Analysis feed

Latest Analysis


Latest Forex Analysis

Editors’ Picks

AUD/USD bounces back above 0.7650 amid risk-recovery

AUD/USD extends the bounce above 0.7650, as the risk sentiment recovers amid retreating US Treasury yields, which put a check on the US dollar's rally. The aussie cheers upbeat NAB Business Survey while shrugging off the sell-off in iron-ore prices. 

AUD/USD News

Cardano price looks primed to breakout to new all-time highs

Cardano advances unabated on its path towards decentralization. The so-called “Ethereum killer” will reach 100% decentralization by the end of March.  ADA price is holding key support at $1.10 as volume remains light.

Read more

Gold looks to regain $1,700 as US Treasury yields drop

Gold consolidates recent losses from nine-month low flashed the previous day. US stimulus may arrive on Wednesday, US 10-year Treasury yields snap four-day winning streak. Risks remain mildly bid, US dollar refreshes highest levels since Nov 2020.

Gold News

GBP/USD attempts a bounce around 1.3850 amid improving mood

GBP/USD trades close to 1.3850, staging an impressive bounce from 1.38 amid a rebound in the risk sentiment and a drop in the US Treasury yields. 50-day SMA offers immediate support, monthly top adds to the upside barriers.

GBP/USD News

US Dollar Index eyes minor pullback after four-day winning run

The dollar index (DXY) has retreated from the session high of 92.50 to 92.40. The pullback may be extended further as the hourly chart Relative Strength Index (RSI) shows a bearish divergence. It occurs when an indicator charts lower highs contradicting higher highs on the price chart and often paves the way for pullbacks. 

US Dollar Index News

Forex Majors

Cryptocurrencies

Signatures