A bad day for big names

Electric vehicles, semiconductors and tech stocks generally perform poorly

Chart of the Day

We saw in yesterday’s newsletter that real interest rates jumped at the tail-end of last week, and equity traders appeared to catch up with that move on Monday as the US indices opened lower and the big names that have done well in the low-rate environment all dropped back sharply. Among the EV stocks, Tesla and Nio dropped by close to 8%. They are obviously still up strongly in the past year, but this could be a taste of what’s to come if real rates keep moving back toward pre-virus levels.

Macro

The German Ifo survey expectations component rose to 94.2 in February, which leaves it broadly consistent with GDP growth of around 0%.

The US conference board leading indicator improved in January. At its current level, it looks consistent with GDP growth of just 1% YoY.

Markets

The bad day for tech stocks was reflected in an underperformance for the Nasdaq.

The Nasdaq didn’t get the award for worst market though, with several EMs doing poorly. Brazil’s index tanked by almost 5% amid political concerns there.

While tech stocks underperformed, it was another good day for the energy index.

That was because oil prices carried on their strong run despite the weakness of equity markets.

As well as EVs, semiconductor stocks also performed poorly, despite reports of very elevated demand at the moment.

The moves didn’t drive up the VIX by that much, so traders don’t seem to be concerned about broader market weakness just yet.

Finally, bitcoin and ethereum didn’t escape unscathed either.

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