Article Hero

Risk aversion market sentiment prevails

Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
What is the reason for this sudden change? The market switched its focus back on geopolitical events

Russian Foreign Minister Lavrov has reawakened fears of a nuclear confrontation, warning that the risks are growing to the extent that Western countries are supplying heavy weapons to the Ukrainian army. All analysts agree that President Putin should show the success of his military operation in early May. The chances of this happening are decreasing, given that the Ukrainian army is getting increasingly more equipped. Russia's reaction to this eventuality is unpredictable. The war in Ukraine, which had lost intensity in terms of its effect on the market, has returned to the stage again.

This circumstance adds to Russia’s announcement to cut off gas supplies to Poland because this country refuses to pay in rubles. Moreover, a German minister stated that a complete embargo on Russian oil would be "manageable.”

If we also consider the ongoing Covid-19-induced lockdowns in China (with the port of Shanghai blocked) and problems in the supply chain, we find all the ingredients for the market to react in fear mode.

Investors are beginning to be more concerned about the negative effects of the war and China's supply problems on the economy than about the interest rate hikes that the Fed might carry out next week.

The clearest sign of a risk-off market can be seen in the performance of US Treasury Bonds, which were strongly bought, reaching a yield of 2.73%.


Yesterday’s purchase of bonds was a positive signal that drove the stock markets higher in anticipation of a not-so-aggressive action by the Fed.

The good results that most North American companies are publishing, 80% of them topping analysts' forecasts, remain in the background given the worsening of the geopolitical scenario.


The Nasdaq index suffered the biggest daily loss of the year, over 5%, and closed below the major support level around the 12,950 area. From a technical point of view, if it continues to drop, it will enter a bear market.

GráficoDescripción generada automáticamente



This information prepared by is not an offer or a solicitation for the purpose of purchase or sale of any financial products referred to herein or to enter into any legal relations, nor an advice or a recommendation with respect to such financial products.This information is prepared for general circulation. It does not regard to the specific investment objectives, financial situation, or the particular needs of any recipient.You should independently evaluate each financial product and consider the suitability of such a financial product, by taking into account your specific investment objectives, financial situation, or particular needs, and by consulting an independent financial adviser as needed, before dealing in any financial products mentioned in this document.This information may not be published, circulated, reproduced, or distributed in whole or in part to any other person without the Company’s prior written consent.
Past performance is not always indicative of likely or future performance. Any views or opinions presented are solely those of the author and do not necessarily represent those of Financial Services (Pty) Ltd trading as CAPEX.COM/ZA acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via CAPEX.COM/ZA, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15.  Magnasale Trading Ltd is the principal to the CFD purchased by investors.

Share this article

How did you find this article?


Read More

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.