Risk-off flows and a Tech/AI Panic – Market Reactions

Ben Graham · February 3

Markets see wild volatility since today's mid-session bell
Geopolitical events and global deleveraging are turning strong trends into high-paced drops
Exploring reactions across Markets to monitor what is moving the most

Markets are getting shaky after the latest headlines – US-Iran tensions are mounting, and this is not boding well with Risk-Sentiment.

It has been reported that an Iranian drone approaching the USS Abraham Lincoln in the Arabian Sea has been downed by US forces, leading to fresh Risk-off flows.

Talks are still expected to take place on Friday.

Risk-off flows and a Tech/AI Panic – Market Reactions - ExpertFX School — US-Iran morning escalation – Source: X, Open Source Intel

Despite a US Government deal having been reached (ending the Shutdown), the mood remains grim, and pointing the pessimistic sentiment weighing more.

The headline was behind the move lower across risk assets this morning. Still, it seems that more anxiety is increasing as it collides with global deleveraging and valuation doubts across Asset classes. This also correlates with this morning's rise in Metals.

Stocks continue to head lower

As you can see, the current deleveraging is particularly strong in Nasdaq, which was down 2.86% at its lows until recently.

Tech/AI stocks are getting rejected harshly as they stand at the extreme of the risk-spectrum and get sold off first when sentiment worsens.

Bitcoin breaks $75,000 but attempts a comeback

Negative sentiment in Crypto actually took Bitcoin below its pre-election Trump levels.

The rest of the Altcoin Market isn't doing much better – Solana just broke the $100 level!

Explore our latest crypto analysis right here!

Oil spikes higher but rejects higher levels

One unusual element in this risk-off move is that US Treasuries haven't shown any reactions – If something serious happens in Iran, expect major reactions in Bonds.

Note: I had been warning of impending volatility for a while in recent articles and was surprised to see such resilience despite the headlines and moves.

It could just be the beginning of a scary story, but as always, if Stock Indexes keep running to all-time highs or even remaining within 10% from them, it could be better to look away from fear to trade with more objectivity.

A closing at the lows of today's session in Equities and Cryptos hints at further chances of a more widespread panic as Participants get ready for more unpredictable outcomes in recent Iran escalations – Will talks really occur on Friday?

Safe Trades and keep an eye headlines!

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