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Daily Market News: Markets drop on Fed hike, Facebook drops on further privacy concerns


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Daily Market News

Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for December 20, 2018.


Highlights include:

  • Markets Drop on Fed Hike: US markets dropped following the Fed announcing that it will raise interest rates from 2.25% to 2.5%. Even though they were expecting the hike, the Fed’s lack of sympathy to current market turmoil caused stocks to drop further.
  • eToro Crypto Exchange Gains Regulatory Approval: eToroX, eToro’s crypto assets exchange, secured Gibraltar’s blockchain license. eToro is now the first multi-asset broker that carries stocks, commodities, currencies, ETFs, and crypto in a fully licensed and regulated offering.
  • Western Union Announces Crypto Support: Western Union’s announcement that they are ready to support cryptocurrencies was met with skepticism by the crypto community. They pointed out that point of cryptocurrencies is that they can be sent without a third party.
  • Facebook Drops On Further Privacy Concerns: Facebook shares dropped 7.25% yesterday on reports that the company let Netflix, Spotify, and other companies read users’ private messages.

Traditional Markets

As expected the Federal Reserve raised their interest rates yesterday from 2.25% to 2.5%. Even though the market was fully expecting it, the indices did see a sharp drop when the announcement hit (purple circle).

The purple rectangle represents the press conference with Fed Governor Jermobe Powell. Powell started off talking very fast and did seem a bit nervous and even cleared his throat several times in the first few minutes, which is never a good sign.

What really dropped the markets though, was that the Fed didn’t at all seem sympathetic to the current market turmoil. They indicate that they’re not about to hike rates aggressively unless the economy grows quicker. However, they seemed unwilling to reduce the pace of their quantitative tightening. Meaning, that they will continue to reduce the size of their enormous balance sheet, which is still way overinflated from 10 years of quantitative easing.

This morning, the Riksbank in Sweden also hiked rates for the first time since 2011. We also have the Bank of England today, which may be over by the time you get this. Don’t worry though UK. Nobody at the BoE wants to hike your interest into the current Brexit uncertainty.

Facepalm

The FAANG stocks seemed to be beaten more than others with Apple sinking to a new low of $159 a share. None were as horrifying as Facebook though who, in addition to the factors above, was slapped down by this news…

It seems Zuckerberg’s PR nightmare is never-ending, FB shares fell 7.25% yesterday. It still seems a bit funny to me how 82% of analysts are recommending a buy position.

Personally, I haven’t logged into their network in more than a week and would rather not comment on their stock.


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Daily Market News: Markets drop on Fed hike, Facebook drops on further privacy concerns

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