Sunday, March 26, 2023

Worries Hit Markets On Probably The Most Fragile Friday Of The Year?


Risk-off Tech off

Risk sentiment is taking a nosedive with equities leading the way, crude turning negative on the day, and and reversing selloffs earlier in the session.

The “risk-off” tech-off” move extends in Asia with global indices heading lower amid downcast large-cap tech earnings. With markets in the pre-election window and the bid side lacking in any meaningful depth, market chatter that a prominent Asia (Japan) investor is liquidating tech stocks does not help matters either.

In general, this week’s stock market underperformance has been led by second-wave/lockdown worries. But tech-specific underperformance reflects SAP SE (DE:), with shares in the tech firm having slumped 22% on Monday to cut its 2020 outlook. 

SAP should have served as a warning shot of the dangers of such large momentum constituents within indices that should have worried tech and indices, buyers, to no end. The Nasdaq concentration risk and outperformance through narrow leadership still worries me

So perhaps we are seeing those ” long and wrong worries” flesh out on probably the most “Fragile Friday” of the year. 


On a continuation of my bearish warning from this morning note.

Fresh worries that politicians worldwide will be pressured to lock down Christmas this year is hitting the markets like a ton of bricks. We are in the thick of the Covid haze now. Winter is coming to the northern hemisphere, where crowding and social- behavioral patterns could be a frightening source of a seasonality bounce in the Covid curve. Indeed, the alarmingly high level of angst in the markets makes it easy for the oil roller coaster to crest rally peaks and head downhill at alarmingly quick speeds.

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