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Powell’s Rollercoaster and Middle East Turmoil
In a day marked by relentless market swings, the rollercoaster ride continued, leaving traders exhausted. The S&P, reacting to developments from the New York Economic Club’s address by Powell and events in the Middle East, experienced wild fluctuations.
Federal Reserve Chair Jerome Powell’s remarks at the New York Economic Club sent shockwaves through the market. Tensions in the Middle East, particularly the conflict between Israel and Hamas, threaten to escalate into a broader regional crisis.
Market Reversals
Here’s a summary of today’s market reversals:
- 0DTE traders displayed extreme bearish sentiment, with Delta flow surpassing equity declines.
- Netflix stood out with a remarkable 17% surge, while Tesla (TSLA) shares plummeted by over 10%, its worst drop since January 2023.
- After 105 consecutive days of closing below 20, the VIX index finally closed above 20, signaling increased market volatility.
Read More: Fed Chair Jerome Powell Suggests Potential Rate Increases Amid Strong U.S. Economy
Middle East Shockwave Escalation
The Middle East is facing a significant crisis. Following the recent attack by Hamas on Israel, the conflict threatens to expand regionally, involving groups like Hezbollah in Lebanon and potentially leading to a full-scale war between Israel and Iran. The humanitarian and economic consequences could be catastrophic, affecting global stability.
Yields Surge, Oil Prices Soar
Yields on government bonds reached record levels, with the 10-year rising to 4.992% and the 30-year touching 5.10%, prompting investment banks to consider buy triggers.
Oil prices experienced a rapid surge, with WTI exceeding $89 and Brent surpassing $93.
Safe Havens and Investments
Investors sought safety in gold, pushing its price to $1974, the highest since July, marking a $150 increase in just two weeks.
Digital gold, represented by Bitcoin, continued to attract buyers, pushing its price to $28,775, the highest since August, with the potential to cross $30K soon.
US Financial System Concerns
Amidst the Middle East shockwave focus, attention is also drawn to the US, where 5-year CDS reached levels not seen since the financial crisis in May, raising concerns about the stability of the financial system.
In a day filled with market turbulence and geopolitical tensions, the Middle East remains a focal point with potentially far-reaching implications for the global economy.
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Disclaimer: Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
