The new norm: Stabilising global risk sentiment in a volatile market

The new norm: Stabilising global risk sentiment in a volatile market

February 6, 2025: We’ve recently witnessed a stabilisation of risk sentiment following a tumultuous week marked by volatile price action. Despite the tech sector’s underwhelming earnings, the MSCI US index managed to eke out a modest gain of 0.4 per cent, buoyed by a broader rally across other sectors. This resilience in the face of disappointing tech earnings speaks volumes about the current market dynamics, where diversification across sectors seems to be paying dividends.

The week’s economic data provided a mixed bag of signals. The US ISM services data, which fell unexpectedly to 52.8 against a consensus forecast of 54.1, sent ripples through the financial markets. This decline in service sector activity led to a significant drop in US Treasury (UST) yields, with the 2-year yield softening by three basis points to 4.19 per cent and the 10-year yield dropping eight basis points to 4.42 per cent.

This adjustment in yields reflects a cautious optimism among investors, perhaps taking some comfort in the narrowing of the 10s2s yield curve, which tightened by another 6 basis points to 23 basis points. This movement in the yield curve suggests that while the market anticipates no immediate rate hikes, the long-term outlook might be less hawkish than previously thought.

Amidst this backdrop, the voices from the Federal Reserve, including Jefferson, Barkin, and Goolsbee, maintained a steady drumbeat of “no rush on rate cuts,” although Goolsbee struck a surprisingly hawkish tone, cautioning about inflation risks stemming from potential tariffs.

This nuanced shift in narrative was further complicated by comments from Treasury Secretary Scott Bessent, who indicated that the Trump administration’s focus on reducing borrowing costs would target the 10-year Treasury yields rather than the Fed’s short-term rates. This policy direction could have profound implications for long-term investment strategies and the broader economic landscape.

The US Dollar Index, reflecting these shifts in economic policy and investor sentiment, fell by 0.4 per cent, reaching its lowest point in over a week. This decline was partly due to receding fears of a global trade war, which also influenced currency pairs like USD/JPY, dropping from 154.50 to 152.50 after Japan reported stronger-than-expected wage growth, sparking speculation of another Bank of Japan rate hike.

Gold, often seen as a safe-haven asset, continued its bull run, climbing to a new high of US$2,865 per ounce. This surge was fuelled not only by the general risk-off sentiment but also by fears that higher tariffs might extend to precious metals and commodities imports from the UK and the European Union.

Conversely, Brent crude oil prices fell by 2.1 per cent after an EIA report highlighted an increase in crude oil inventories, adding to the overhang of geopolitical risks in the oil market.

Looking at the equity front, Asian markets took their cues from Wall Street, opening higher, while US equity futures suggested a positive start for American stocks, indicating a potential continuation of the stabilisation trend.

The week wasn’t just about traditional markets; significant strides were made in the digital asset space. White House Crypto Czar David Sacks announced that the first priority for the administration would be stablecoin legislation. This move comes at a time when stablecoins, despite their popularity mainly overseas, have yet to find a clear regulatory path in the US The establishment of a Crypto Task Force, with SEC Commissioner Hester Peirce at the helm, aims to carve out a regulatory framework that balances innovation with investor protection.

The task force’s agenda is ambitious but necessary. It seeks to eliminate the regulatory ambiguity that has long plagued the crypto industry, where businesses operate under the shadow of potential legal repercussions without clear guidelines. Commissioner Peirce emphasised in her statement that the SEC’s initiative isn’t an endorsement of any crypto asset but rather an effort to provide a regulatory environment that makes sense for crypto while safeguarding investors from fraudulent schemes. The focus on stablecoins is particularly pertinent, given their role in providing liquidity and stability within the volatile crypto market.

This regulatory push could potentially be legislated within six months, according to Sacks, which is a bold timeline considering the complexities involved. Yet, it signals a significant shift towards integrating cryptocurrencies into the mainstream financial system, recognising their potential while addressing the inherent risks.

In conclusion, this week’s market movements reflect a broader narrative of stabilisation amidst volatility, driven by economic data, policy signals, and geopolitical developments. The focus on stablecoin regulation could be a game-changer for the crypto market, potentially fostering an environment where digital assets can thrive under a clearer legal framework.

However, the journey towards such stability in both traditional and digital markets is fraught with challenges, requiring a delicate balance between fostering innovation and ensuring economic and financial integrity. As we move forward, the interplay between market sentiment, regulatory actions, and global economic policies will continue to shape our financial landscape in unpredictable but potentially rewarding ways.

 

Source: https://e27.co/the-new-norm-stabilising-global-risk-sentiment-in-a-volatile-market-20250206/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Navigating the new financial terrain: From geopolitical shifts to crypto volatility

Navigating the new financial terrain: From geopolitical shifts to crypto volatility

On February 5, 2025, the landscape of global finance has been reshaped by a mix of easing geopolitical tensions and shifts in regulatory focus, leading to a nuanced risk sentiment among investors. This change in perception comes at a time when market participants are increasingly viewing China’s approach as more measured and cautious, particularly in contrast to previous years. This perception has contributed to a positive movement in stock indices, with the MSCI US index showing a commendable 0.7 per cent increase. Sectors like Energy, Consumer Discretionary, and Information Technology have been at the forefront of this rally, each gaining over 1.5 per cent in recent trading sessions.

However, not all economic indicators have been glowing. The US JOLTS job openings data, which came in below expectations, has led to a recalibration in market expectations. This has directly influenced the US Treasury yields, with both the 2-year and 10-year yields experiencing a decline. The 2-year yield dropped to 4.214 per cent, while the 10-year yield fell to 4.511 per cent. This movement in treasury yields often signals investor uncertainty about future economic growth or inflation rates, further reflected by a significant tumble in the US Dollar Index, which saw a 0.9 per cent decrease, ending a three-session rally.

Comments from San Francisco Fed President Daly have added to the narrative, suggesting that the US economy is in a stable position, which might not necessitate preemptive policy adjustments by the Federal Reserve in response to the current administration’s actions. This cautious optimism from a key Fed official underscores a belief in the resilience of the US economy amidst ongoing global negotiations and policy shifts.

Shifting focus to commodities, Brent crude oil prices edged up slightly by 0.3 per cent, as investors continue to weigh the implications of US-China trade relations and the reinforcement of sanctions on Iran. Meanwhile, gold has soared to new all-time highs, driven by safe-haven buying amid global uncertainties, illustrating the market’s jittery mood when it comes to geopolitical risks.

Markets in flux: Navigating economic uncertainty

In Asia, the economic news was not all cautionary; Japanese nominal wages have seen an increase at the fastest pace in nearly thirty years, providing a solid backdrop for the Bank of Japan’s recent decision to hike rates. This wage growth could signal a strengthening consumer base in Japan, potentially impacting consumer spending and economic recovery. Asian equity indices responded positively to these developments, with many markets showing gains in early trading sessions.

On the other side of the globe, the cryptocurrency market has been experiencing its own set of challenges. The current administration’s move to scale back on crypto enforcement has seen the SEC reassigning lawyers from its crypto enforcement unit, marking one of the first concrete steps in a more relaxed regulatory approach towards cryptocurrencies. This could be interpreted as either a boon for innovation in the crypto space or a red flag for potential future volatility due to less oversight.

The crypto market, however, took a significant hit with the news of China investigating tech giants like NVIDIA and Google, amidst an escalating trade war. This led to a massive US$2.5 billion dump by Crypto AI traders, with the sector plunging by 8.5 per cent. The ripple effects of these investigations are not just confined to tech stocks but have a profound impact on AI-driven crypto trading algorithms, which are sensitive to regulatory news and trade policies.

Adding to the crypto market’s woes, President Trump’s Solana meme coin experienced a dramatic 37 per cent plunge, becoming the day’s biggest loser among the top 100 coins. This sharp decline underscores the volatile nature of meme coins and highlights how quickly market sentiment can shift in the cryptocurrency world, especially under the shadow of broader trade conflicts.

From my perspective, while the easing of global tensions has provided a brief respite and a boost to certain sectors, the underlying currents of geopolitical manoeuvres, regulatory shifts in cryptocurrency, and technological developments continue to create an unpredictable environment. Investors need to remain vigilant, balancing optimism with a keen eye on policy developments, especially in technology and trade sectors. The interplay between traditional markets and the burgeoning digital asset space is becoming increasingly complex, necessitating a nuanced approach to investment strategies in this new financial terrain.

As we navigate through these choppy waters, the key will be adaptability, informed decision-making, and perhaps, a cautious embrace of innovation in financial technologies, all while keeping an eye on the broader economic and political context that shapes our global markets.

 

Source: https://e27.co/navigating-the-new-financial-terrain-from-geopolitical-shifts-to-crypto-volatility-20250205/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Elon Musk’s father targets $200M with new memecoin

Elon Musk’s father targets $200M with new memecoin

Errol Musk, the father of entrepreneur Elon Musk, revealed his intentions to enter the memecoin market, hoping to raise $200 million to support the Musk Institute, a for-profit think tank. His memecoin, dubbed Musk It (MUSKIT), quietly debuted on December 12, 2024, through a Middle Eastern cryptocurrency company but has since struggled to gain momentum.

The launch of MUSKIT comes on the heels of a resurgence in retail investor interest in celebrity-associated memecoins. This trend was recently highlighted by the introduction of the Official Trump (TRUMP) memecoin on January 18 and the Official Melania (MELANIA) token on January 19, both on the Solana network. These tokens have sparked renewed enthusiasm for memecoins among retail investors.

However, the Musk It token has not experienced similar success, with its value plummeting by over 52% since its launch. As of this morning, the token’s price stood at $0.02, with a market capitalization of $25 million, according to data from CoinMarketCap.

Errol Musk has made it clear that his son, Elon Musk, is not involved with the Musk It memecoin project. Despite the family name’s influence, the absence of Elon Musk’s direct support could limit the token’s potential for success. Anndy Lian, an author and intergovernmental blockchain expert, expressed skepticism regarding the memecoin’s prospects, suggesting that Elon Musk’s personal endorsement is a key driver for excitement in such projects.

The broader memecoin market remains a speculative space, with investors often attracted to the possibility of high returns. Memecoins are sometimes described as “lottery tickets of the digital world,” offering the chance of significant gains but also carrying the risk of substantial losses due to their inherent lack of utility.

While the Musk It token faces challenges, the memecoin market has seen instances of remarkable trading success. For example, one trader turned a $27 investment into $52 million during the Pepe memecoin rally, holding the investment for over 600 days. In another instance, a trader achieved a staggering 1,500-fold return on investment in just 10 hours with the Hyperfy (HYPER) metaverse token, turning $2,000 into $3.2 million on January 6.

 

Source: https://www.investing.com/news/cryptocurrency-news/elon-musks-father-targets-200m-with-new-memecoin-93CH-3841862

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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