There is a general decline in the financial markets today, affecting almost all assets: stocks, bonds, cryptocurrencies and commodities.
Everything Is Crashing: Stocks, Bonds, Crypto, Commodities All Tumble https://t.co/W0hQAHiWaj
— zerohedge (@zerohedge) May 19, 2021
Even gold is now down 0.20% compared to yesterday.
The most significant drop is in cryptocurrencies, with bitcoin at -15%, and several altcoins doing even worse, such as ETH (-24%), BNB (-25%), XRP (-24%), ADA (-26%) and DOGE (-27%).
Tesla’s stock on the Nasdaq in the pre-market lost 3%, while Coinbase’s stock lost almost 6%.
Only the US dollar index rose, slightly, indicating that traders and investors are probably looking for dollars today, so much so that they are willing to sell everything else at low prices.
Something similar happened last year, in mid-March, when there was a real crash in the financial markets. Although the current situation should be completely different, as the pandemic is being overcome, panic still prevails in the financial markets today.
The reasons for the fall in financial markets
Indeed, pessimism is spreading after the ECB warned the eurozone that it will have to deal with high financial stability risks, due to high debt burdens, and emerging inflation concerns.
The yield on 10-year US Treasury bonds hit a weekly high of 1.67%, triggering a general sell-off in Apple, Microsoft and Facebook shares, which lost 1% in pre-market trading.
In fact, financial markets have been suffering since yesterday.
According to Daiwa Securities‘ chief global strategist Hirokazu Kabeya, worries over inflation are making investors reluctant to make important decisions until they see a clearer picture. He stated:
“Inflation worries will keep markets uncertain for now, even though I don’t expect stock prices to collapse given economic re-openings”.
In March last year, the crash lasted about a week, with the recovery to pre-collapse levels occurring as early as the following week, and a return to highs in less than two months. But the Fed’s massive intervention was necessary, also made possible by very low inflation at the time. There is no guarantee that the Fed will do the same this time.