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Monday, February 03, 2014 |
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| Monthly Newsletter: January |
Dear NIRAV,
We finished the first month of the year with the markets hitting turbulence. Global equities are down, with US stocks hitting surprising lows, and emerging market economies are sending investors into a panic. Not surprisingly, the Fed moved forward with its’ modified taper plan and Gold (finally) posted an increase. We cover it all in our January Newsletter, including the most significant economic trends. And, as always, don't miss our cartoons! |
News Summary |
Global equities ended January with deep losses, with U.S. stocks posting the largest monthly decline in over a year, as a selloff in emerging economies prompted investors to stage a broad-based retreat from riskier assets.
The Dow Jones dropped 5.3% in January, the S&P fell 3.6% and the Nasdaq ended the month down 1.74%.
Emerging markets were hard hit by a combination of concerns over the impact of cuts to the Federal Reserve’s stimulus program and fears over a possible slowdown in China. The Turkish lira and the South African rand tumbled after surprise rate hikes did little to shore up the currencies.
Emerging market economies are vulnerable to reductions in Fed stimulus, as they rely on foreign investment to plug their current account deficits. On January 29 the Fed said it would scale back its monthly asset purchase program by another $10 billion to $65 billion, as the economic recovery continues to strengthen. One day later, data showed that the U.S. economy grew 3.2% in the fourth quarter, in line with expectations.
The euro ended the month at ten-week lows against the dollar, with the pair falling to 1.3488. The drop in the euro came after data showing that euro area inflation slowed in January fueled fears that the European Central Bank may tighten monetary policy in order to stave off the risk of deflation in the region.
Gold posted its first monthly increase since August, gaining 3.2% as weakness in global equities bolstered safe haven demand for the precious metal.
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| Emerging Market Currencies |
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| South African Rand and Turkish Lira got crushed in January as emerging market currencies were in turmoil |
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This Month's Sentiments |
EUR/USD Gold S&P 500 |
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| Editor's Pick |
Cam Hui continues to conclude that all systems remain green for the US equity markets--at least for the next few months, but he's uneasy about prospects for later in the year. He's therefore keeping an eye on what he considers a series of Bearish Market Triggers and notes that investors would be wise to look out for such things as weakness in housing or Fed tightening. See his full list of indicators for additional tripwires.
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| Comics |
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Please feel free to contact us with any questions or suggestions you may have.
Thanks,
The Investing.com Team
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