The NASDAQ Composite tech index had its worst January in at least 10 years, falling 8.98% to 14,239.88 points, a similar loss to the 7.86% drop it reported in January 2016, followed by five years of gains.
Meanwhile, the Dow Jones Industrial Average is at 35,131.86 points, with a loss of 3.32% in January and the S&P 500 fell 5.26% in the month to 4,515.55 units.
Among the companies that fell the most on the NASDAQ were AMD (-20.60%), followed by Novavax (-34.51%) and Netflix (-29.10%) in January.
The expectation of the start of the rate hike by the United States Federal Reserve, geopolitical tensions and the correction of the stock market generated great volatility in January, impacting stock markets globally.
In Asia, the main stock indices posted heavy losses in January. South Korea’s Kospi fell 10.56%, the Shanghai index lost 7.65% and Japan’s Nikkei 225 fell 6.22%. Only Hong Kong’s Hang Seng gained 1.73 percent.
In Europe, the losses were led by the German DAX with a fall of 2.60%, the French CAC 40 lost 2.15% and the Ibex 35 of Spain had a decrease of 1.16%, while the FTSE 100 recovered and ended with a rise of 1.08 percent.
latin america wins
The Latin American stock markets took advantage of the volatility and marked increases in the first month of 2022. The Colombian Stock Exchange (Colcap) gained 8.93% while the Argentine Merval rose 8.87%, and the Brazilian Bovespa advanced 6.98 percent.
Gabriela Siller, director of Economic Analysis at Banco Base, explained that the Fed’s monetary policy, as well as the increase in cases of coronavirus infections globally, geopolitical tensions and the financial results of the quarterly reports at the end of 2021 affected markets in January.
“During the first part of the month, more restrictive comments were highlighted by the members of the Fed, so the market began to discount a first increase in the interest rate as of March. Later, on January 26, after Jerome Powell’s conference, speculation increased about the possibility of more than four interest rate hikes this year,” he said.
“An increase in interest rates reduces the attractiveness of investing in riskier assets such as equities. In addition, the discount rate of the discounted flows at present value is increased, reducing the valuations of the companies”, the specialist recalled.
According to the firm Black Wallstreet Capital, January began with important corrections for most of the stock markets in the world, and it is that risk factors increase aversion.
“The Fed’s stance is confirmed as restrictive and the increase in rates would be present from the first quarter, while the decrease in the balance sheet would take place in the second half of the year. Under this assumption, greater volatility is expected in the global financial markets”, said Jacobo Rodríguez, director of Economic Analysis at BWC.