Wednesday, February 8, 2023
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Stocks lower as retail investors suffer heavy losses in 2022

Stocks finished lower Friday, with all the major averages posting losses for the week as worries persisted over continued rate hikes.

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Friday’s moves came after November’s producer price index showed higher-than-expected wholesale prices, which rose 0.3 per cent last month and 7.4 per cent over the previous year. Core PPI, which excludes food and energy, also topped expectations.

Optimistic consumer sentiment data alleviated some fears, but attention remains laser-focused on this week’s busy economic calendar.

This includes the consumer price index due out Tuesday, which is expected to show whether inflation has receded. The Federal Reserve will likely deliver a 50 basis point hike at the end of its December meeting on Wednesday.

And over the weekend the International Monetary Fund & the World Bank raised concerns about a worsening global outlook, while hopeful that China’s reopening will help support world growth. The IMF currently forecasts global growth will be 2.7 per cent next year, slowing from 3.2 per cent this year.

The Dow Jones Industrial Average shed 0.9 per cent. The S&P 500 lost 0.73 per cent, while the Nasdaq Composite fell 0.7 per cent. On a weekly basis, the Dow fell 2.8 per cent to post its worst week since September. The S&P lost 3.4 per cent, while the Nasdaq dropped 4 per cent.

In company news, shares of Lululemon tumbled nearly 13 per cent after the company gave a weaker-than-expected fourth-quarter outlook. DocuSign jumped 12.5 per cent on strong results, with billings and subscription revenue ahead of consensus. Shares of streaming service providers got a lift after two analysts boosted their price targets and gave optimistic outlooks for Netflix. And Tesla was one of the best-performing stocks in the S&P 500, bouncing back after four consecutive days of losses.

Bloomberg has reported that Investment portfolios owned by individual investors have lost a combined $350 billion this year. The average retail trader’s portfolio is down 30 per cent in 2022, compared to the S&P’s 17 per cent loss – some estimates put the damage as even worse than that: JPMorgan calculates that retail traders are down 38 per cent this year.

At the apex of the meme stock craze in Q1 2021, Charles Schwab was handling 8.4 million daily average trades. In Q3 of this year, it recorded 5.5 million.

And Robinhood, both an enabler and the villain of the individual trader movement, shed 1.8 million users between Q2 and Q3 this year.

Across the sectors, all were lower except communication services, without much readthrough. Energy underperformed, dropping 2.3 per cent, the seventh-straight session in the red.

Last week marked a pivotal moment in global geopolitics, as a European embargo and G7 price cap on Russian crude came into force. Russia, faced with the humiliation of western powers dictating the price it earns for its oil, threatened to halt exports to any countries complying with the price cap. It appears that the oil price is now more focused on growing recession fears after weak economic data from China, Europe and the United States.


The SPI futures are pointing to a 0.5 per cent fall.


One Australian dollar at 7:40 AM has strengthened compared to the US dollar on Friday buying 67.95 US cents (Fri: 67.71 US cents).


Iron ore futures are pointing to a 0.8 per cent gain.

Gold added 0.5 per cent. Silver gained over 2 per cent. Copper fell 0.5 per cent and oil lost 0.6 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris added 0.5 per cent, Frankfurt gained 0.7 per cent and London’s FTSE closed 0.1 per cent higher.

In Asian markets, Tokyo’s Nikkei rose 1.2 per cent, Hong Kong’s Hang Seng gained 2.3 per cent and China’s Shanghai Composite closed 0.3 per cent higher.

On Friday, the Australian sharemarket added 0.5 per cent to close at 7213.

Dividends payable

Hancock & Gore (ASX:HNG)
Washington H Soul Pattinson & Co Ltd (ASX:SOL)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.


The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.

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