Year in review: Top market trends – What we can learn from 2021
From the booming cryptocurrency market to central banks keeping interest rates at zero, we reflect on trends and developments of 2021.
Bitcoin hitting record highs, Tesla’s great year, gold going nowhere… 2021 has been an incredible year for traders. We’ve seen incredible market highs and devastating losses in certain sectors.
From the dozens of new crypto assets being added in 2021 to tech stocks soaring for most of the year, there have been loads of trading opportunities.
What can we learn from this year? What are some trends we should watch out for in 2022? Fred Razak, CMTading senior trading specialist, answers these questions and more as he reflects on 2021.
Q: What about commodities?
Razak said: “So the pandemic has had a cultural effect on us as well, forever changing the travel industry. That leads us into commodities where the oil industry is, the market is still supplying demand yet it’s still prone to shutdowns and travel bans. How many markets are opening? How much is travel going to change? These are major questions commodity traders need to ask themselves.
“This is different from where gold is now; it’s almost irrelevant because it’s not a demand-supply kind of asset anymore. It’s no longer the asset of the alternative of the US dollar as Bitcoin has started to gain that momentum and taken up that niche.”
Q: What are some of the biggest trends of the year?
Razak said: “OK, so there haven’t been any major trends necessarily this past year, but you know the fact that governments and central banks have been keeping interest rates at zero and putting all this money into the markets where it’s almost, you know, ridiculous not to borrow money at this rate. It has fueled the economy, turbocharging it.”
Q: What about Forex?
Razak said: “So, some of the biggest information I think of the past year is that it reflects the fork symbol. The fork symbols pretty much do an upside-down V formation; They went up against the Dollar, they did well and then they’re correcting themselves at the latter part of 2021 including the euro, the GBP, and the Aussie dollar.
“They all appreciated, going into the first two quarters of 2021 and now the give been giving up steam as we enter the latter part of 2021 so that has been a very clear trend this past year.”
Q: What are some of your favourite stocks of 2021:
Razak said: “Some of my favorite stocks this past year includes Tesla. The company saw a momentous year, really proving to the world that it is a contender and that this shift from gasoline to electric cars is no longer a pipe dream. It’s no longer something that was just in Southern California, where the high-tech companies and all the techie geeks were living. This is something that is here to stay, and this is a new trend that is going to set the new standard for motor vehicles around the world. In terms of stocks, it’s the biggest story and the fact that Tesla is so successful in fact, that they continue to be successful.”
Q: What happened in stocks/equities in 2021
Razak said: “It’s the Microsoft and FAANG stocks that took us to these high levels that we are today. Going into the beginning part of 2021, we were still in the heart of the pandemic, going back and forth between lockdown and reopening, in most countries around the world.
“In South Africa in 2021, the lockdowns were debilitating. You had lots of riots and you know a lot of frustration with the government not being able to handle and provide for its citizens in a timely way. This is something I think has become prevalent around the world; there’s a lot of discontent for central governments right now as to their handling and controlling of society.
“For stocks, it’s the FAANG group (Facebook, Apple, Amazon, Netflix, and Google), namely Facebook and Apple hitting new record highs for the year. Google didn’t hit new highs as well as Amazon despite being very strong. This shows that the shift from the pre-Coronavirus world that we lived in of people traditionally going into work five days a week has now been changed. Maybe forever. That might be the new standard where people work three days out of the week from home and two days in the office or vice versa, or whatever you know. This will surely affect the prices of real estate commercial real estate for offices and such. Offices in certain locations around the world went from a traditional, pay-by-lease model to going to like something akin to a ‘We work’ scenario. So that is something that I think is a new standard as well.”
Q: What about travel? How will the ongoing pandemic affect countries?
Razak said: “How much travel is expanding in the world at the current levels will depend on the ongoing cycle of opening and closing, backward and forwards. Some countries have remained closed like Australia and certain countries have opened and closed their doors depending on the spread of the coronavirus. I think this will continue until 2022. That is a current trend which will give us volatility when it comes to the commodity of oil.”
Q: What happened in the crypto market this year?
Razak said: “In terms of cryptocurrencies, it is now quite evident that the cryptocurrencies are also here to stay. They’re also a new standard, solidifying the fact that gold is no longer the standard alternative to the US dollar and it’s very clear that Bitcoin has now taken that limelight.
“In all fairness, this is something that has been a sore thumb for many countries. Since World War Two, countries have resented the fact that the US dollar is the base currency of what we trade in commodities such as oil and gold. It’s all based on dollars now, which means that if any country wants to buy oil or gold, they must take their base currency; So, in South Africa’s case it would be South African Rand then converted to U.S dollars, and then they could purchase the asset.
“We saw a tremendous comeback for Bitcoin where it sold off to $29,000 to $68,000 at its highest so volatility still sustains that market.”
Q: What about trends for 2022?
Razak: “In terms of certain trends for the past year, I think I think things were cyclical in a very real sense. Cyclical means that markets either expand or contract based on the time of the year and based on market cycles. We saw that quite clearly this year with gold rallying into certain parts of the year. Wheat, soybean, and the staples of foodstuff rallied in September, which is a traditional rally in the US markets. Between certain periods, we had a brief sell-off into September going into October, which was natural in US markets. I think cyclical has been something that has played itself out this past year, and that’s also because the markets are being traded by people.
“The other thing to note in stocks is the indices that have reached all-new record highs this past year. This enhanced expectations and has given people the confidence that the markets are expanding, and they are getting stronger. That’s something that I think maybe corrected by going into 2022 where the markets are going to be less supported by the central government and the central banks. You’ll then see corrections in the market prices; real estate, stocks, and inflation have been affected. The dollar’s strength is not what it was two years ago. Going in 2022, these corrections will have a huge effect on all markets.”
Advice for traders:
Razak said: Nothing fundamentally changes in the markets with regards to trading. As long as you know how to navigate your way in trading the financial markets, you’ll be able to deal with any challenge. The starting point is education. Visit CMTrading webinars and you’ll learn how to spot trends and understand market analysis. You’ll learn how to execute, open and close trades and take advantage of all the opportunities the markets provide.
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Prices are accurate at the time of publishing.