07.04.25 - Wild rollercoaster - panic!
Following last week's decline, the market extended its losses with a sharp sell-off in panic on what can only be described as a Black Monday.
Markets were rattled by renewed tensions over tariffs, sending volatility sharply higher. US President Donald Trump issued a stern warning to China over its planned 34% tariffs. He threatened that if China proceeds, the US could retaliate with an additional 50% tariff on Chinese imports, fueling fears of a deeper trade war.
After the Nasdaq slipped into bear market territory last week, the S&P 500 followed suit today, officially entering a bear market as well.
Meanwhile, investor sentiment remains deeply pessimistic, with the Fear & Greed Index firmly in the “Extreme Fear”zone.
Source: CNN.com - 07.04.2025
Markets: after a sharp drop this morning, global markets could stabilize on very low levels. In later trading hours Nasdaq could turn green and cryptos recovered from the morning sell-off; gold sees some profit taking while US dollar gains with higher interest rates.
My view: This morning, I observed signs of forced selling in the market. Following sharp downside moves, investors, particularly those running leveraged portfolios, are often forced to reduce their positions to limit losses and meet margin calls.
Such moments usually offer some good buying opportunities, and attractive entry points for long-term investments. I therefore decided to take advantage by adding few new positions to the ETFMandate portfolio, both, single stocks and ETFs, with a more defensive stance and long-term investment horizon.
At the same time, with the sharp drop I took profits on short ETFs and volatility positions and closed several short positions. Overall, this results in a modest increase in the equity allocation within the ETFMandate portfolio.
I will continue to closely monitor the markets in the coming days, watching for key news and developments. I do not see the time yet to increase significantly the exposure as uncertainties remain elevated. Investors view is increasingly aligning with the likelihood of a recession, which brings potential risk for further downside. In case a recession occurs, markets saw a correction of around 30% in the past.
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