The Canadian dollar is affected by various factors, including tariffs, trade dynamics, global economic growth, housing market conditions, political stability, and energy prices.

Despite potential challenges, there is an opportunity for improvement. The article refers to specific elements that could influence the value of the loonie and outlines conditions necessary for a potential recovery.

For a more detailed analysis of these influences and additional insights, further information can be found in the referenced piece on the Canadian dollar’s outlook.

A variety of forces shape the direction of the Canadian dollar. Tariffs influence trade costs, affecting the ability of businesses to compete internationally. Global economic conditions determine demand for exports, while domestic housing trends indicate financial stability and consumer confidence. Political factors affect long-term investment sentiment, and energy prices play a role because oil remains a major export. When all of these factors shift—whether separately or at the same time—markets react accordingly.

Beneath these broader movements are specific scenarios that could lead to change. If trade barriers ease or demand for Canadian commodities strengthens, the currency could reflect this adjustment. A rise in oil prices often boosts export revenues, improving economic prospects. Political stability reassures investors, increasing the appeal of Canadian assets. However, any strain in these areas creates uncertainty, which markets price in immediately.

We are watching particular developments that hold weight in the weeks ahead. Economic reports will reveal whether underlying conditions support currency stabilisation. External factors such as central bank decisions abroad could drive fund flows into or out of Canadian assets, depending on how interest rate expectations shift. These elements do not operate in isolation. One change often sets off reactions elsewhere, influencing sentiment across different sectors.

When evaluating opportunities, it is essential to keep an eye on interest rate trends. Differences in borrowing costs between countries can either draw capital into Canada or push it elsewhere. The direction of oil prices remains another key factor. If energy demand weakens globally, pressure on the currency could increase. Trade relationships also require close observation, as shifts in policy can impact export growth and investor confidence.

Understanding how these moving pieces interact allows for informed responses. Some factors take time to develop, while others cause immediate reactions in the markets. Monitoring data releases and global policy decisions offers clarity, making it easier to adapt. Observing shifts early can provide an advantage in anticipating how market conditions will unfold.

Bitcoin has received more institutional interest than Ethereum, attributed to its status as a store of value and clearer regulations. Despite this, the BTC/ETH ratio has increased by over 221% in 763 days, indicating Bitcoin’s dominance.

Bitcoin’s appeal lies in its fixed supply, making it attractive for hedging against inflation. The approval of Bitcoin Spot ETFs in early 2024 led to substantial institutional inflows, with Bitcoin ETFs holding 3.7% of its market cap compared to Ethereum’s 3.1%.

The BTC/ETH ratio is at a resistance level of 43, and Bitcoin’s relative strength index is nearing overbought territory. As institutional interest in Ethereum rises, the increase in Ethereum ETF holdings from 4.8% to 14.5% suggests potential for an ETH rally.

Ethereum’s foundational role in smart contracts and DeFi positions it to benefit from broader market trends. Potential Ethereum ETF approvals in 2025 could further enhance its demand.

Investors seeking stability might prefer Bitcoin, while those looking for higher returns may consider Ethereum. A balanced portfolio can accommodate both assets, with strategies varying based on risk tolerance.

Key indicators to watch include the BTC/ETH ratio, institutional ETF flows, macroeconomic trends, and Ethereum’s staking and DeFi growth. Bitcoin often experiences a slowdown post-halving, potentially allowing Ethereum to gain traction. A trend reversal could occur in 2025, requiring careful observation.

Strengthening Bitcoin’s position, the steady influx of funds into its exchange-traded funds highlights the confidence institutional investors place in its long-term viability. The asset’s finite supply and well-established regulatory framework provide a level of certainty that traditional financial entities find appealing. As a result, allocations continue to favour it over Ethereum. Even so, the shifting proportion of institutional holdings suggests a gradual but noticeable adjustment.

Ethereum, supported by expanding ETF interest, is experiencing higher relative demand. Its utility-driven nature makes it distinct, offering exposure to decentralised finance and smart contract applications. The market’s willingness to absorb growing ETF allocations indicates a longer-term shift in perception. While Bitcoin remains the preferred asset for those looking for stability, Ethereum’s increasing presence in institutional portfolios suggests a reassessment of its potential.

With the BTC/ETH ratio lingering at resistance, price action in the coming weeks needs to be closely observed. A prolonged period above this threshold could further cement Bitcoin’s strength. However, a rejection would imply an opportunity for Ethereum to regain ground. The historical cyclicality of these movements adds weight to the argument that a rebalancing may be overdue. Institutional positioning will heavily influence this dynamic, making fund flow data an essential metric to track.

Other macroeconomic forces remain at play as well. Market liquidity, inflation readings, and central bank policy decisions could introduce fluctuations. A restrained liquidity environment has typically benefitted Bitcoin due to its harder monetary attributes, while Ethereum tends to perform better in periods of expansion. With future monetary policy still uncertain, adjustments to existing strategies may be needed.

Ethereum’s staking growth should not be overlooked either. More assets entering staking reduce liquid supply, potentially amplifying price movements, particularly if demand continues to rise. Similarly, DeFi-related adoption ties Ethereum closer to broader risk sentiment in financial markets. These evolving factors could dictate institutional behaviour, reinforcing the importance of monitoring activity across multiple sectors.

Historical trends suggest that Bitcoin tends to consolidate following a halving event, giving other assets time to advance. If this pattern persists, Ethereum could be positioned to gain in the coming months. Investors may look to adjust their exposure accordingly, with any changes in the trend likely requiring prompt responses. Positioning should take into account near-term movements without losing sight of the broader macroeconomic landscape.

Gold prices decreased slightly on Friday but are set to close the week positively, achieving eight consecutive weeks of gains, reaching an all-time high of $2,954. As of now, XAU/USD is trading at $2,940, down 0.15%.

US President Donald Trump’s tariff policies on various goods have contributed to the rise in gold prices as demand for safe-haven assets increased amid trade policy uncertainties. Meanwhile, progress in the Russia-Ukraine discussions has somewhat alleviated market tensions.

US business activity showed mixed results; while the manufacturing PMI improved, the Services PMI experienced its first decline since January 2023. Additionally, Existing Home Sales dropped, and consumer sentiment worsened according to the University of Michigan data.

Although gold prices remain upwardly biased, potential exhaustion in the trend is indicated by the Relative Strength Index (RSI). Key support levels include $2,900, while resistance levels are found at $2,950 and $3,000.

Gold is an important historical asset, often serving as a store of value and a medium of exchange. Central banks, being the largest holders of gold, diversify their reserves to strengthen their economies and currencies during turbulent periods.

The price of gold often moves inversely with the US Dollar and Treasuries. Factors such as geopolitical instability and lower interest rates typically lead to gold price increases, while market rallies may exert downward pressure.

Overall, various elements influence gold prices, requiring investors to remain aware of market dynamics and conditions.

Even with Friday’s marginal pullback, gold remains on track for its eighth weekly gain, reinforcing its position as a sought-after asset. The peak of $2,954 underlines the strong buying demand, though Friday’s slight dip to $2,940 suggests some traders are taking profits. The trend remains bullish, but signs of hesitation at these levels should not be dismissed too quickly.

Donald’s trade policies have played a role in pushing gold higher, with tariffs triggering uncertainty that drives investors toward safer assets. At the same time, discussions in Eastern Europe appear to have eased some concerns, but not enough to alter gold’s broader trajectory. With safe-haven demand moderating slightly, any further developments in these talks could weigh on the metal or, conversely, reinforce its appeal should tensions escalate again.

Economic data released in the United States has painted a mixed picture. Manufacturing activity showed a rebound, offering some relief, yet the services sector contracted for the first time in well over a year. Housing market numbers also disappointed, with existing home sales falling. Consumer sentiment, as measured by the University of Michigan, deteriorated, reflecting growing worries about inflation and broader economic conditions. These figures, collectively, suggest that uncertainty remains, which historically tends to keep gold well-supported.

Technically, prices continue to lean higher, but momentum may be wavering. The RSI is approaching levels that typically indicate overextension, which means a potential short-term cooldown cannot be ruled out. Should a pullback occur, the $2,900 level stands as the first key support area. On the upside, buyers face resistance close to $2,950, with $3,000 being the next test should bullish momentum persist.

Long-term, gold’s role remains unchanged. Central banks continue to prioritise it when managing reserves, especially when economic conditions appear unstable. They see it as both a hedge and a stabilising factor for their currency holdings. These institutions have been consistently adding to their reserves, highlighting their confidence in gold’s resilience.

Gold continues to react to movements in the US dollar and government bonds. Typically, when the American currency weakens or Treasury yields decline, gold benefits. Geopolitical risks and monetary policy easing also tend to push prices higher, whereas a strong equities rally might divert demand elsewhere. Right now, multiple factors are at play, which makes careful observation of these interconnected elements all the more important in the weeks ahead.

With all these influences in motion, understanding both the immediate technical setup and the broader economic signals will be essential. Gold has had a strong run, but not without potential obstacles ahead. Those engaged in trading need to remain nimble while keeping an eye on both price action and external forces that could shift the current trajectory.

The Mexican Peso (MXN) weakened against the US Dollar (USD) due to a contraction in Mexico’s GDP in Q4 2024, marking the first decline since 2021. The exchange rate stood at 20.41, with a 0.54% increase for the USD.

Mexico’s GDP shrank by 0.6% quarter-on-quarter, lower than the previous year’s growth of 1.1%. The annual growth for 2024 was 1.2%, the worst since 2020.

Banco de Mexico (Banxico) adjusted its growth forecast for 2025 down to 0.6% from 1.2%. This outlook is below the Finance Ministry’s projection of 2.3%.

US economic data showed mixed results, with manufacturing activity improving while the Services PMI fell into contraction. Existing Home Sales and Consumer Sentiment also declined.

Monetary policy divergence between Banxico and the Federal Reserve supports further gains for USD/MXN. President Trump has announced a 25% tariff on cars effective April 2 amid ongoing US-Mexico trade tensions.

Technical analysis indicates that USD/MXN remains in a modestly upward trend. Resistance is evident near 20.40, with potential levels of 20.50 and 21.00 if it breaches.

The MXN’s value is influenced by economic performance, foreign investment, and central bank policies. Additionally, macroeconomic data plays a critical role in shaping the currency’s strength.

A weaker peso following the GDP contraction was expected. With growth slipping into negative territory for the first time in years, markets reacted accordingly. The 0.54% gain in the dollar against the peso reflects this shift in sentiment.

Quarterly contraction of 0.6% is a stark contrast to the growth posted a year prior. Expansion at 1.1% in the same quarter of the previous year gave a sense of stability, but this downward move changes that perception. Full-year growth of 1.2% makes this the poorest result since 2020, reinforcing concerns over slowing economic activity.

Banxico’s revision for next year’s growth underscores a lack of confidence in a swift recovery. The adjustment from a 1.2% estimate to just 0.6% is substantial. Expectations from the Finance Ministry remain higher at 2.3%, but that disconnect raises questions about whether government forecasts are overly optimistic.

Meanwhile, economic results from the United States paint a mixed picture. Manufacturing is showing signs of improvement, but the same cannot be said for services. With the Services PMI dipping into contraction territory, the sector many depend on for stability is not providing reassuring numbers. On top of that, existing home sales declined, a sign of weakness in one of the economy’s most critical sectors. Consumer sentiment also faltered, suggesting that spending and confidence may take a step back.

Differences in policy between Banxico and the Federal Reserve continue to favour the dollar. While markets often follow interest rate decisions closely, broader policy direction plays just as large a role. With disparities between the two central banks growing, it stands to reason that USD/MXN is seeing continued gains.

Trade tensions are another hurdle. Trump’s latest move, a 25% tariff on cars set to begin in early April, marks a serious escalation. Markets do not take these announcements lightly, as they affect both investor sentiment and economic forecasts. With US-Mexico trade conditions worsening, concerns over future relations could weigh on the peso.

From a technical perspective, momentum in the currency pair remains pointed upward. Resistance levels have formed near 20.40, but pressure remains. If that barrier breaks, 20.50 becomes the next point of focus, followed by 21.00. These are numbers that traders will be watching closely, as they mark key areas where movement could accelerate further.

We know that a currency’s strength does not exist in isolation. Its direction is shaped by economic conditions, investor confidence, and central bank policies. This week’s data reinforces that reality, making the coming weeks one to watch closely. Macroeconomic results will continue to shape expectations, and with so many factors at play, developments are likely to be swift.

Silver prices decreased to $32.54 after failing to maintain the $33.00 threshold, reflecting potential downside risks if the $32.00 support does not hold. The next resistance point is noted at $33.20, while key support is located at the 100-day SMA around $31.12.

On Friday, Silver’s price lost ground despite lower US yields, with the 10-year T-note yields falling almost eight basis points to 4.431%. The XAG/USD pair shows a decrease of 1.20%, suggesting weakening bullish momentum as indicated by the RSI.

For a continuation of upward movement, buyers need to surpass the February 20 high of $33.20. If successful, the next target will be the February 14 peak at $33.39, ahead of the $34.00 mark.

If the XAG/USD declines below $32.00, it may apply further selling pressure. Initial support lies at the 100-day SMA at $31.12, followed by the 50-day SMA and 200-day SMA at $30.70 and $30.46, respectively.

Silver struggled to hold above $33.00, slipping to $32.54, which raises the possibility of further downward movement if the $32.00 level does not hold. The next hurdle for a rebound sits at $33.20, while a more extensive drop could see prices finding support near the 100-day SMA, currently hovering around $31.12.

Last Friday, the price weakened even as US Treasury yields moved lower, with the 10-year yield declining by nearly eight basis points to 4.431%. This would typically support metals, yet silver still dropped by 1.20% on the day. The Relative Strength Index signals waning bullish enthusiasm, which traders should take into account before expecting another rally.

For buyers to regain control in the near term, prices must climb past $33.20, a level last hit on 20 February. Should this threshold be cleared, attention will turn to $33.39, the peak from 14 February, and beyond that, the psychological marker at $34.00.

If support at $32.00 fails, the probability of further declines increases. Investors should monitor the next key areas on the downside, with the 100-day SMA around $31.12 acting as the first line of defence. Below that, additional pressure could emerge near the 50-day and 200-day SMAs at $30.70 and $30.46.

With technical indicators reflecting slower momentum, traders should assess whether buyers can step back in soon or if further weakness will unfold.

The AUD/JPY pair has experienced a sharp decline, falling to around 94.80 and breaking below the 20-day Simple Moving Average (SMA). This represents its lowest point in over two weeks, indicating that sellers are currently in control.

The Relative Strength Index (RSI) is deeply in negative territory, showing that bearish momentum is increasing. Additionally, the Moving Average Convergence Divergence (MACD) histogram is rising with red bars, further signalling downside pressure.

For a shift in market sentiment, the pair needs to recover above the 20-day SMA. The next support level is anticipated around 94.50, while resistance may occur near the 20-day SMA at approximately 96.00.

What we are seeing here is a clear indication that sellers have taken control, pushing prices lower and breaking through a technical level that had previously acted as a foundation. The move below the 20-day Simple Moving Average suggests that downside momentum is picking up pace, and unless buyers step in with conviction, further losses cannot be ruled out. With the current price near 94.80, traders should prepare for possible movement toward the next reference point around 94.50.

Momentum indicators reflect what is happening beneath the surface. The Relative Strength Index has dropped firmly into bearish territory, meaning that downward forces remain strong. The Moving Average Convergence Divergence histogram is also displaying red bars that continue to grow, reinforcing the idea that selling pressure has not eased. These technical signals suggest that those expecting a recovery may need to be patient, as the current conditions are not in their favour.

For sentiment to shift, there must be a recovery above the 20-day SMA. That line, now acting as a barrier near 96.00, is likely to be a point where sellers re-emerge if the price attempts to climb. Until that threshold is cleared, rallies could be short-lived, and traders may need to adjust their expectations accordingly.

If movement toward 94.50 continues, attention should turn to whether buyers emerge at that level or whether weakness persists. If the decline extends below that point, it could open the door to further losses. On the other hand, if support holds firm, a period of price consolidation may follow.

Although short-term traders will need to navigate the ongoing decline, any attempt at recovery must be viewed alongside overall momentum. As long as downward forces dominate, sellers will stay in control, and breakouts toward higher levels could struggle to gain lasting traction.

Germany will hold elections on Sunday, February 23, with the first exit polls released at 6 pm CET. Initial results will be available 30 minutes later, followed by ongoing updates.

The conservative CDU/CSU leads in the polls with 31%, while the far-right AfD has 21%, the Social Democrats hold 15%, and the Greens have 13%. A coalition is necessary, which may take weeks to finalise due to the stable polling landscape.

A potential two-party coalition could involve the CDU/CSU with either the SPD or Greens. If confirmed, Friedrich Merz of CDU/CSU will take over as Chancellor from Olaf Scholz.

Attention will be focused on the AfD’s performance against their 21% poll prediction. Although they lack a coalition option, a strong result could encourage other parties to collaborate on economic stimulus measures and reform.

Increased defence spending is anticipated as a major priority for the new government. While fiscal changes could positively impact the economy, growth expectations remain low for the year.

Euro trading on Monday is expected to be stable, with potential relief trades following the election.

Volatility may initially be subdued in currency markets as the vote unfolds, but that does not mean traders should overlook potential shifts in sentiment once coalition discussions begin. If the CDU/CSU secures a strong mandate, we could see initial optimism in bond and equity markets, particularly if coalition negotiations with the SPD or Greens appear orderly. However, uncertainty will remain a feature over the coming weeks as policymakers work to finalise a governing agreement.

Friedrich’s prospects of replacing Olaf hinge on expected deal-making, which could take considerable time given the polling margins. Markets will be watching for any indications of policy direction, particularly regarding fiscal discipline or tax policies that could impact investor sentiment. While any strategy changes will take months to implement, early signals from party leaders could shape near-term positioning.

Traders will also be monitoring how the AfD’s final result compares to polling projections. If support exceeds expectations, it may increase speculation about broader shifts in voter sentiment, which could push policymakers to adjust their stance on economic relief measures. The extent to which other parties react could influence corporate confidence and broader fiscal planning.

Defence investment, already a topic of heightened discussion, is set to be a key theme in post-election negotiations. Any clarity on spending plans may have implications for industries tied to security and infrastructure, potentially affecting equity sectors linked to government procurement. The challenge for policymakers will be balancing these priorities with efforts to maintain budgetary discipline.

Although euro movements are likely to be measured at first, a smooth political transition could offer reassurance to investors. Early signs of stability in coalition negotiations may increase appetite for riskier assets, though any setbacks in forming a government could dampen sentiment. The extent of relief trades, if any, will depend on whether major policy concerns are addressed swiftly.

Economic expectations remain cautious for the year, meaning any overly positive market reaction could be short-lived unless reforms gain traction. In the days following the election, clarity from party leaders on fiscal plans and investment priorities will shape how traders navigate the shifting conditions.

Consumer sentiment in the US for February stands at 64.7, lower than the expected 67.8, with long-term inflation expectations reaching a 30-year high. Canada’s retail sales rose by 2.5% in December, surpassing the 1.6% forecast, while US existing home sales for January were reported at 4.08 million, slightly below the 4.12 million estimate.

The S&P 500 dropped 1.7% and the Russell 2000 fell by 2.9%. WTI crude oil decreased by $2.26 to $70.22, and the US 10-year yields fell 7 bps to 4.35%.

Market concerns centre on inflation, US tax cuts, and tariffs, alongside reports of a covid-like illness in China. The FX market showed a flight to safety, benefitting the yen and challenging commodity currencies, with EUR/JPY and CAD/JPY at recent lows.

February’s consumer sentiment figure for the US came in well below what many had anticipated. A reading of 64.7 versus an expected 67.8 suggests that confidence in the economy is slipping, which can have a direct effect on spending patterns. A weaker consumer outlook often translates to caution in household budgets, potentially slowing overall economic activity. At the same time, long-term inflation expectations have climbed to levels last seen three decades ago. If households and businesses believe inflation will persist at these levels, it could influence wage negotiations, borrowing behaviour, and ultimately, price-setting by companies.

Meanwhile, Canada’s retail sector provided a contrast, delivering a 2.5% rise in December, well above the forecast of 1.6%. This points towards much stronger spending than expected, which could imply resilience in household demand. However, whether this robustness carries forward into subsequent months remains a question, particularly with interest rates still at levels that restrain borrowing. Meanwhile, existing home sales in the US landed slightly shy of estimates, coming in at 4.08 million instead of the projected 4.12 million. This slight miss suggests the housing market remains under pressure, likely due to affordability constraints tied to mortgage rates.

Equities reacted broadly negatively. The S&P 500 lost 1.7%, while smaller-cap stocks, represented by the Russell 2000, fell by 2.9%. When smaller companies underperform larger names, it often signals decreased risk appetite among investors. The drop in WTI crude oil prices by $2.26 to $70.22 per barrel suggests a rethink regarding demand expectations. Further declines in energy prices could reflect concerns over economic momentum globally. Meanwhile, the 10-year US Treasury yield dipped by 7 basis points to 4.35%, pointing to increased demand for safer assets.

Among reasons for the current mood in markets are continued worries about inflation, discussions surrounding US tax policies and trade tariffs, and reports of a respiratory illness in China resembling previous outbreaks. Each of these elements carries the potential to sway risk sentiment, whether through shifts in monetary policy expectations, adjustments in global trade flows, or broader concerns over disruptions to business activity.

Currency markets reacted in a way often seen during periods of uncertainty. The yen benefitted from a shift in positioning towards safer assets, while currencies linked to commodities struggled. Both EUR/JPY and CAD/JPY retreated to levels last seen weeks ago. If cautious sentiment persists, traders may continue favouring currencies considered safer, at least in the near term.

Bybit crypto exchange reported a breach where a wallet was drained of $1.5 billion in Ethereum, potentially marking one of the largest thefts to date. Despite the loss, the exchange confirmed it remains solvent and clients’ assets are fully backed.

CEO Ben Zhou stated that the company would secure a bridge loan to mitigate the situation and dismissed concerns over a possible bank run. Reports suggest the attack may be linked to a North Korean group associated with the 2022 Axie Infinity Ronin Bridge hack, which involved $620 million.

The incident affected market sentiment, with Bitcoin and Ethereum dropping 3% and 4%, respectively. Comparatively, the loss rivals the 2002 Iraqi central bank robbery valued at $920 million, which would equal around $1.5 trillion today when adjusted for inflation.

A security breach of this scale naturally raises fears about the safety of funds held on exchanges. While Ben reassures everyone that all customer assets remain unaffected, traders will likely keep a close eye on any unusual withdrawal patterns in the coming weeks. The quick response with a bridge loan is intended to prevent liquidity concerns, but scepticism lingers whenever such large sums disappear.

With such an attack allegedly linked to an organisation previously tied to the Ronin Bridge hack, there is reason to believe methods used here may have evolved from past intrusions. If that suspicion is correct, firms relying on similar security models should be assessing their weaknesses immediately. We have seen time and time again that lapses in cybersecurity lead to vast sums of money being siphoned away before defences are adjusted. It is a pattern that cannot be ignored.

Market movements immediately reflected anxiety. A 3% loss in Bitcoin and a 4% dip in Ethereum is not catastrophic, but it does show that sentiment can shift quickly when a high-profile player takes a hit. Traders reacting to uncertainty often exaggerate short-term price swings, particularly when fear of further disruptions spreads. Some may take the view that such a drop presents a buying opportunity, whereas others may adopt a defensive stance, reducing leverage or limiting exposure until volatility diminishes.

Comparisons to the 2002 Iraqi central bank robbery put this event into a historical context that illustrates the scale of what has occurred. A financial loss that, if adjusted for inflation, would convert into around $1.5 trillion today serves as a stark reminder of how rare incidents of this magnitude truly are. Nonetheless, differences exist. This attack does not involve physical cash disappearing from a vault but rather a digital operation targeting vulnerabilities that may not have been fully appreciated until it was too late.

In the near term, market participants will also be watching how regulators react. Large-scale breaches tend to revive discussions about oversight, security requirements, and the potential risks of leaving vast sums on centralised platforms. Moves towards decentralised alternatives may accelerate as a result, but they bring their own risks, particularly for those unfamiliar with non-custodial solutions. Shift too quickly, and mistakes can be made. Stay too still, and the next attack could find weaknesses left unaddressed.

We do know that shocks like these test confidence in exchanges. Each similar breach in the past has led to increased scrutiny and calls for accountability. Whether that scrutiny results in meaningful changes or fades into the background over time depends on how well responses are executed. For now, the immediate focus rests on stabilising operations and reassuring traders that the worst has passed.

The major US indices have closed lower, with the NASDAQ down by 2.20% and the Russell 2000 index decreasing nearly 3%. The Dow industrial average fell by 748.63 points or 1.69% at 43,428.02, marking a weekly decline of 2.51%.

The S&P index dropped 104.39 points or 1.71%, ending its week at 6,013.13, its poorest week since January 6. The NASDAQ fell by 438.36 points or 2.20% to 19,524.01, also experiencing its worst performance since November 11.

The Russell 2000 decreased by 66.39 points or 2.94% to 2,195.34, with a weekly decline of 3.71%. Following a 20-day closing high, Meta shares fell for four consecutive days, down 7.21% for the week.

Large-cap stocks showed varied performance this week, with Nvidia down 3.21%, Microsoft down 0.34%, and Amazon declining by 5.29%. Alphabet fell 3.01%, while Apple rose by 0.38%. Other notable declines include Tesla at 5.07%, Palantir down 14.91%, and Broadcom down 6.17%.

The sharp declines across major US indices highlight a clear shift in sentiment. A 2.20% drop in the NASDAQ and a nearly 3% decline in small-cap stocks demonstrate that investors reassessed their positions, particularly in high-growth and risk-sensitive assets. The Dow’s 748-point slide underscores similar concerns, dragging it down by 2.51% over the week. The S&P 500 wasn’t spared either, suffering its worst weekly performance since early January.

Tech stocks, which had previously driven monumental gains, saw mounting pressure. Meta’s abrupt reversal after reaching a 20-day closing high suggests that enthusiasm around its recent momentum was replaced with a more cautious stance. A four-day losing streak wiped out its short-term strength, settling at a 7.21% weekly decline. Large-cap names followed suit. Nvidia’s 3.21% retreat comes after a strong rally, while Microsoft’s smaller dip of 0.34% suggests some resilience compared to the broader sell-off. Amazon dropping 5.29% alongside Alphabet’s 3.01% decline reinforces the idea that even well-established names weren’t spared from broader retracements.

Apple, on the other hand, managed to edge modestly higher, a rare sight amid a widespread pullback. Tesla’s ongoing struggles were evident in its 5.07% decline, adding to a series of concerns around demand and execution. Meanwhile, Palantir’s steep 14.91% loss paints a picture of extreme volatility, with broad scepticism around its ability to sustain previous gains. Broadcom also found itself under pressure, shedding 6.17%.

Looking ahead, short-term swings will likely remain pronounced, particularly as traders balance positioning against upcoming catalysts. The steep nature of the selloff suggests risk-taking has cooled, but that does not mean further downside is off the table. The way institutional investors adjust portfolios in response to this shift will provide clues. Some may see discounted valuations as opportunity, while others could opt for more caution, waiting for confirmation of stabilisation before re-entering.

For those assessing derivatives tied to these names, close attention to volume trends and open interest may help in gauging sentiment shifts. If downside positioning accelerates, expectations of further weakness could become self-reinforcing. Conversely, if hesitation to extend declines emerges, it may indicate markets are reaching a more stable footing.

Highly volatile names continue to be the most affected. With the Russell 2000 lagging, the appetite for higher-risk equities appears to be fading. A bounce-back is not guaranteed, especially if overall liquidity tightens or macroeconomic conditions shift in an unfavourable direction. If hedging activity increases, that could reinforce defensive behaviour, particularly within sectors that have seen recent selling pressure.

While broader sentiment may feel fragile, it is the reaction in the options market that could provide some of the clearest signals on what comes next. Relative strength in defensive positioning and shifts in implied volatility levels will assist in determining the degree of caution that institutions are exercising. Watching for sharp swings in weekly expiry contracts could provide early indications of any potential shift.