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The Cambridge Weekly – 14 February 2022

Investment climate change

Stock markets around the world continued their volatile trading pattern over the past week, although compared with January, trending slightly up rather than down. Bond markets, on the other hand, continued to retreat as yields continued to rise. This type of market action has now become characteristic for capital markets this year, as they experience their very own climate change, now that the coronavirus appears to have lost its lethal impact on the majority of the population.

 

Metal prices signal optimism – and a warning to speculators

Commodities stole the show in 2021. The post-lockdown boom meant plenty of demand for goods, ensuring plenty of demand for raw materials. Meanwhile, COVID complications and a host of production issues severely dampened supply. For most of us, recent fuel and energy price rises have been the clearest signs of soaring input costs, but the metals were the ones to get the lockdown party going.

 

Insight: small cap dynamics

We have seen some high-profile missteps for big companies recently. There were spectacular sell-offs for Meta (Facebook) and Netflix – two previous stock market darlings – after they posted disappointing results and outlook statements on profits and user growth. Last week, we wrote how these episodes underlie a change of fortunes for America’s mega-caps. Investors poured into these stocks throughout the pandemic, but the move to an endemic virus situation (which requires less entertainment services from home), tightening monetary policy and possible market saturation problems have soured the picture somewhat.

 

Read the full commentary here

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