Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

The Dust Settles

By Swissquote Ltd (Ipek Ozkardeskaya)Market OverviewMay 13, 2022 11:46
The Dust Settles
By Swissquote Ltd (Ipek Ozkardeskaya)   |  May 13, 2022 11:46
Saved. See Saved Items.
This article has already been saved in your Saved Items

Thursday has been another hectic trading session. European stocks opened significantly lower, but losses melted throughout the day, and Euro Stoxx recorded less than 1% drop at the close. The FTSE index fell faster than most of its European peers, as energy and commodity stocks took a toll on the back of the rising fear that an eventual economic recession could eat into their profits in the coming quarters.  

BP (LON:BP) lost 4.70% yesterday, and near 8% this week, but energy stocks remain comfortably on a positive trend to claim fresh post-pandemic highs, as crude oil is back on track for more gains on the rising tensions between Russia and Europe.  

While the Europeans are going around their own sanctions against Russia by opening accounts with Gazprom (MCX:GAZP) bank to pay for Russian gas in exchange for rubles (!!), the latest news suggests that Russia is now cutting German gas as retaliation to its sanctions.  

Of course, the Europeans have been quite bad in this poker game - they showed too openly how scared they were to lose Russian gas that now, Russia is gaining the upper hand. 

European gas futures gained another 13% yesterday, and the pressure on energy prices remains clearly tilted to the upside. Although the fear of recession tends to cause some selloff, the price pullbacks are still seen, by some, as opportunity to strengthen the long positions, and help oil companies outperform.  

In this sense, Saudi Aramco (TADAWUL:2222) has surpassed Apple (NASDAQ:AAPL) in terms of market capitalization this week, to become the world’s most valuable company. The latter is very symbolic, in fact, as it symbolizes the revenge of the energy companies which have been shattered during the pandemic months, against the tech companies that have greatly benefited from the lockdown measures.  

European and US futures are in the positive this morning, but the wind could change direction very fast these days. And the rising market volatility is more of a sign of potential further losses than sustainable gains. 

Looking for signs of USD correction 

In the FX space, yesterday was again marked by the strength of the US dollar. The dollar index extended gains to a fresh almost-20-year high. The EUR/USD tanked to 1.0350 level, then rebounded to test the 1.04 this morning. Traders are increasingly positioning for the pair to advance toward parity sooner than previously predicted.  

Cable fell to 1.2165 on the back of a broadly strong US dollar, as well. The dollar-lira on the other hand remains under a decent positive pressure, and the dollar’s current strength is costing big to the Turkish central bank which puts a lot of weight behind the lira, in an effort to keep it steady against a relentlessly strengthening greenback.  

The dollar index is up by 10% since the beginning of the year, and 17% since last May, and many investors know that the actual rally in the US dollar won’t last; it will soon be time for a correction. Of course, the hawkish Federal Reserve (Fed) expectations, the war in Ukraine, and the selloff across all asset classes boosted appetite in the greenback. Yet, as soon as investors have enough confidence to return to the market, the dollar will likely give back a part of its current strength. In this sense, I guess it’s just a matter of time we see the strong dollar ease. The question is, will we see the euro hit parity, and sterling reach the 1.20 level before the trend reverses?  

Dust settles 

The dust seems to be settling in cryptocurrencies. Terra and Luna are now worth almost nothing and probably won’t regain the investors’ confidence, and Tether, another stablecoin had a mini-crash to 0.95, BUT it recovered fast before things got serious, and Bitcoin returned past $30K, which is a sign that the confidence in the broader sector may have not been damaged as much as we first feared. This being said, crypto investors will certainly be pickier in selecting their holdings from now on, as the Terra incident comes as a warning that the cryptocurrencies can crash as fast as they emerge.

The Dust Settles

Related Articles

The Dust Settles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email