With surging inflation in mind, the ongoing war in Ukraine, and renewed COVID-19 lockdowns in some cities like Shanghai, the market was extremely volatile in May. From crypto to big tech shares and indices, below are some of the market sectors most affected by the aforementioned changes.
Big Tech’s Slump
In an attempt to fight a 40-years high surging inflation, the Federal Reserve increased its benchmark interest rate by half a percentage point on the 4th of May, the largest increase thus far since 2000. While a broad market selloff was prominent and many market sectors suffered the consequences of inflationary pressures, it seems that big tech stocks took the hardest hit.
Accordingly, Apple (APPL), suffered a loss of $220 billion in value since the close of trading on Wednesday, following the Fed’s announcement as investors offloaded on big tech stocks. And overall, Apple plummeted by 10% by the end of May.
Other tech giants to have suffered setbacks are NVIDIA, Alphabet, Meta, Amazon, and Netflix.
The tech sector was not the only sufferer of May’s uncertainties. Crypto too, experienced a downward trend as central banks struggled to tighten monetary policy in an effort to fight inflation, which caused the value of Stablecoin TerraUSD to plummet. Therefore, the crypto market took a sharp hit and lost over $200 billion between the 11th and 12th of May. Consequently, since the 4th of May Bitcoin (BTCUSD) lost 20% while Ethereum (ETHUSD) erased half of its market value by losing 34% by the end of the month. The Crypto 10 Index, which gauges the trajectory of some of the most popular cryptos, declined by 36%, hitting a new monthly low for 2022.
Despite the bleak slump experienced by digital currencies like Bitcoin, there might still be a light at the end of the tunnel for the crypto sector. Last Sunday, Bitcoin was able to recoup some of the losses it incurred during the month of May by rising to about $30000, its largest daily return since March. Moreover, some analysts posit that the end of the crypto winter might be seen on the horizon. This, in turn, might have brought a sense of relief to investors and traders alike.
COVID Restrictions Stunt Tesla’s Growth
Although COVID restrictions around many countries were lifted, the two-month lockdown in Shanghai which began in March and continued to May caused a setback in the production of Tesla vehicles in the Shanghai plant. Due to intensifying Covid-19 lockdowns, the EV factory was faced with supply issues on the 9th of May, which forced the halt of production. This, in turn, made it difficult for manufacturers to operate. Consequently, Tesla's car production lowered its production forecast to around 200 cars a day which is way below its regular 1200 daily units.
In addition, some investors may have been worried about Elon Musk’s attention being shifted from Tesla (TSLA) to Twitter following the news of his acquisition of the social media platform on the 12th of April. All of these factors combined led to a 20% loss in Tesla’s value over the month of May.
With the start of a new month and as the uncertainties regarding monetary policy, the war in Ukraine, and inflation among other factors still persist, much of what the future holds for the market is still opaque. Investors might have to wait and see what the future will unfold.