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Private investors are selling off stocks at the fastest pace since 2020. Should investors sell stocks now? 

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should investors sell stocks now

In the U.S., private investors are dumping U.S. stocks at the fastest pace since the pandemic broke out in 2020, CNBCwrites, citing data from JPMorgan Bank. Why do investors sell stocks? The sell-off comes amid the Federal Reserve’s plans for further aggressive rate hikes to fight decades of record inflation.

Should investors sell stocks now?

According to JPMorgan, retail investors have been selling U.S. stocks en masse for the last two weeks. Just last week, they got rid of securities totaling $2.4 billion. For stocks, the past two weeks have been the worst since March 2020, the bank said.

JPMorgan’s data showed the most active selling last week was in large-cap U.S. technology stocks, as rising interest rates could particularly hurt their financial performance. The strongest sales by retail investors were recorded in the shares of Apple — they reached $470 million. During the week, the company’s securities fell by 8%. In shares of Alphabet, the parent company of Google, sales over the week amounted to $128 million; in securities of Microsoft — $70 million.

Retail investors also shrugged off $72 million in shares of sporting goods maker Nike after the company reported a 44% increase in inventory over the last quarter and said it would offer more discounts ahead of the U.S. holiday season.

Chip maker AMD and NVIDIA also saw strong sell-offs by private investors. Sales in AMD stock reached $105 million over the past week, while sales in NVIDIA stock reached $55 million.

Earlier we reported that gold prices are now sluggish in anticipation of US labor market data.

Forex

Eurozone GDP growth estimate raised to 0.3% in Q3

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Eurozone by GDP

The Eurozone GDP economy in 19 countries increased by 0.3% in Q3 compared to the previous quarter, final data from the EU Statistical Office showed. An increase of 0.2% was previously reported, and analysts on average did not expect to revise that estimate, according to Trading Economics.

Eurostat Eurozone GDP – current data

On an annualized basis, Eurozone GDP rose by 2.3% in July-September, not 2.1% as previously reported. In the 2nd quarter of this year, Eurozone GDP growth was 0.8% quarter-on-quarter and 4.1% year-on-year. This news had a positive effect on the current Euro Bund situation.

The GDP of the 27 EU nations grew 0.4% quarter over quarter in Q3, following a 0.7% increase in the previous quarter. Growth in annual terms was 2.5%.

The highest quarter-on-quarter growth was seen in Ireland (2.3%), Cyprus, Malta, and Romania (1.3%). The largest decrease was observed in Estonia (-1.8%), Latvia (-1.7%) and Slovenia (-1.4%).

Consumer spending in the euro area in the 3rd quarter grew by 0.9% relative to the 2nd quarter, in the EU – by 0.7%.

The volume of exports from the euro area increased by 1.7%, from the EU – by 1.9%. Imports increased by 3.4% in the euro area and by 3.2% in the EU.

The Eurostat report also includes data on the dynamics of employment in the euro area and the EU in Q3. According to the final data, the number of employed people increased by 0.3% in the euro area and by 0.2% in the EU compared to the previous quarter.

Germany’s quarterly GDP growth accelerated to 0.4% after rising 0.1% in Q2, France slowed to 0.2% from 0.5%; Italy to 0.5% from 1.1%, and Spain to 0.2% from 1.5% a quarter earlier.

Earlier, we reported that the dollar was appreciating against most currencies on December 7.

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The dollar is getting stronger against most currencies

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is the dollar getting stronger against the euro

The dollar is getting stronger. The U.S. currency continues to be supported by a general decline in risk appetite on world markets, due to growing fears of a recession in the U.S. and worldwide.

Inflation will drain Americans’ financial reserves and could lead to a recession sometime in the middle of next year, the head of JPMorgan Chase & Co (NYSE:JPM) said Tuesday. Jamie Dimon. His Goldman Sachs Group (NYSE:GS) colleague David Solomon also expects a recession in the United States in the coming months as the Federal Reserve (Fed) continues to tighten monetary policy.

Solomon estimates a 35% chance that the Fed can achieve a significant slowdown in U.S. inflation without triggering a recession in the economy. “That said, we have a reasonable expectation that we will still see a recession in one form or another,” The Wall Street Journal quoted Solomon as saying.

Is the dollar getting stronger against the euro? In the Euro / U.S. Dollar, the European currency fell by 0.06% – to $1.0461 compared to $1.0467 at the close of the previous session. The pound, by that time, fell by 0.07% to $1.2124 against $1.2133 the day before.

The dollar/yen rate rose by 0.26% to 137.35 yen against 137.00 yen at the close of the previous session.

The index, calculated by ICE, which shows the dollar dynamics against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and Swedish krona) is stable after a steady rise in the previous two sessions.

Earlier we reported that ICE warned the EU about the consequences of the gas price cap.

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ICE warns EU about how gas price cap affects the economy

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gas prices affecting the economy

ICE has warned the European Union that an attempt to cap the price of gas on the TTF index (Europe’s largest hub, located in the Netherlands) will likely only make it more expensive. The cap on gas prices will have a very significant effect on the economy. 

“In a memo sent to the European Commission, ICE, which trades on the TTF index, said the proposal to cap natural gas prices could lead to even higher prices, despite the fact that the initiative itself is designed to mitigate the effects of gas price hikes,” the agency wrote.

The gas price effect on the economy is hard to overstate. As Reuters notes, the note also says that liquidity providers are likely to buy short positions and stop selling TTF gas futures if prices rise even relatively close to the cap to hedge against the risk of holding those positions. According to ICE, the resulting shortage of sellers in the TTF market will result in higher prices.

On November 22, the European Commission proposed introducing a ceiling price for a monthly TTF futures price of 275 euros per MWh (a little over $2,800 per thousand cubic meters of gas at euro and dollar parity). However, on November 24, EU energy ministers didn’t agree on a price cap and postponed a decision until a meeting scheduled for December 13. As the Financial Times reported earlier on Tuesday, the EU countries are considering reducing the proposed gas price ceiling from 275 to 220 euros per MWh (2,275 euros per thousand cubic meters).

According to the previously proposed idea of the European Commission, the mechanism should be launched under two simultaneous conditions: the estimated monthly futures price on the index of Europe’s largest gas hub TTF exceeds 275 euros per MWh for two weeks, and the spread between the TTF price and the global price of LNG is at least 58 euros for 10 consecutive trading days.

When the mechanism is in place, there will be no corresponding trades above €275. However, this is a very high level. The settlement price of the TTF monthly futures has exceeded €275 for only a few days in the history of this hub in August this year. On August 19 it was at around €245 per megawatt hour, skyrocketed to a historic high of above €340 on August 26 (just over €3,500 per thousand cubic meters), and quickly declined to around €265 as early as August 30.

Earlier we reported that the inflation rate in the euro zone was close to its peak.

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