After starting the year on a firm footing, volatility in global equity markets picked up sharply in the final week of January. The move lower in equity markets was sparked by extraordinary retail investor buying, of stocks unfancied by hedge funds and institutional investors who had previously sold (shorted) the same stocks as part of their own strategies. Co-ordinating their activity on Reddit forums, amateur investors targeted names such as Game Stop, the US high street computer games store, surging share prices several hundred percent higher and inflicting heavy losses on professional investors who scrambled to buy back the stock they had sold. These unusual moves led to a wider deleveraging in markets, with low quality stocks rallying and higher quality favoured stocks selling off.

By the start of February financial market volatility was receding again and risk assets resumed a robust climb higher. At the same time 10-year US Treasury yields have tracked c. 0.20% higher hitting a post-COVID-19 crisis high of 1.27% (at the time of writing). However, the accompanying US Dollar strength has been limited with the trade weighted index only rising 0.25% and trending lower versus Sterling being unchanged (-1.2% MTD).

Read the whole note here





Disclaimer: The value of investments and any income from them can go down as well as up and investors may not receive back their original investment amount. This communication is for information purposes only. It is not intended as a personal recommendation of particular financial instruments or strategies and it does not provide individually tailored investment advice. This document provides the views of the London & Capital Investment Team examining the fundamental background, economic outlook and possible effect on asset markets. This document is not an invitation to subscribe and is by way of information only. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. If you are considering investing, you should consult your London & Capital adviser. The views expressed herein are those at the time of publication and are subject to change. Correct at time of going to press.
London and Capital Asset Management Limited is authorised and regulated by the financial conduct authority, 12 Endeavour square, London, E20 1JN. Firm reference number 143286. Registered in England and wales, company number 02112588. © London and Capital Asset Management Limited. All rights reserved. London and Capital Wealth Advisers Limited is authorised and regulated by the UK Financial Conduct Authority (firm reference number 120776) and by the U.S. Securities and Exchange Commission of 100 F street, NE Washington, DC 20549, with sec firm reference number 801-63787. Registered in England and Wales, company number 02080604. © London and Capital Wealth Advisers Limited. All rights reserved.