The modern financial markets environment is very different to how it was 10 years ago.
Today, the internet providers and ‘big tech’ giants dominate the American stock markets and are seen as a bastion of stability among investors.
During the 1990s the stock markets were led by big industrial giants, pharmaceuatical multinationals and construction magnates, however the tech age has given rise to the world’s most prestigious blue chip stock indices being dominated by the large internet and e-commerce giants such as Facebook, Amazon and Google.
These have been going from strength to strength for a sustained period of time to the extent that they are now benchmarks, and have such high levels of capitalisation that they are considered to be low risk assets among traders and asset managers alike.
Usually, movements within markets that are dominated by highly capitalised leaders such as the ‘big tech’ companies is rare, but the last two weeks has been a period in which that trend has been broken.
Just a week ago, on March 15, the NASDAQ index was at its lowest point in one year at 12,843.81. This was a very interesting situation as the NASDAQ is synonymous with publicly listed, big-cap technology companies whose stock price moves very small amounts.
Since that low point a week ago, the NASDAQ has begun to rise again, and is up 9.09% over the five day average, before dropping a very small 0.4% on yesterday’s US close.
Although the gains over the past five days have still left the NASDAQ index at a lower point than its position at the beginning of the year which was a very high point that had been sustained since November last year, it does show a rebound from the lows of last week as pessimism set in regarding inflation figures which were already high before the current war began.
At the beginning of March, the Nasdaq Composite lost 3.6% and by March 6 was standing at 12,830.96, which brought it into bear market territory, more than 20% from its all-time close.
Therefore, the movement upwards this week is interesting and has contributed to the volatile chart pattern.
These are very unusual times, and the stock markets are responding in unusual ways.
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