We are already more than halfway through 2022 and have seen some major market ups and downs that have pushed traders to their limits. While it can be difficult to stay ahead of economic events and maintain your confidence, it is essential to remember that this is what CFD trading is for. As you know, online trading involves the risk of loss, and that’s why being a trader means having the discipline and skills to make the next trading move.
A thorough knowledge of technical and fundamental analysis can create an effective trading strategy that will allow you to understand market movements and plan your trading day more easily. Let’s take a look at some of the most significant events that shook the markets in the second quarter and their potential effect on the rest of the year.
Main economic events of Q2
Inflation: this economic phenomenon has affected all aspects of the economy and continues to shape financial markets. Inflation occurs when prices rise due to increased production costs caused by a sharp increase in demand for services and products. Obviously, this has enormous consequences for society that can prove destructive.
High inflation can make the stock market more volatile, as we have seen in these months with the stock market hitting record highs and lows. Eventually, a prolonged period of high inflation can lead to an economic recession which will have lasting effects on society, including higher unemployment and lower incomes, and traders and investors generally shy away from volatile markets as they seek refuge.
The S&P 500 fell -20.6%: this second quarter was the worst half performance in the last 50 years for the S&P 500. This was the result of many factors, including high inflation expectations, a tightening of monetary policy by the Federal Reserve and the devastating effects of the Russian-Ukrainian war. The sell-off in stocks also heightened recession fears, as traders and investors brace for what’s to come when the economy takes a turn.
Encryption crash: 2022 has been a bumpy road for major cryptocurrencies, to say the least. If you think about the fact that Bitcoin managed to reach over $65,000 in 2021 and then fell just above $20,000 in June 2022, you may start wondering if the crypto bubble is about to burst. . In Q3, BTC is still struggling to stay above the $20,000 benchmark as traders are hesitant to take the plunge.
What could be the next step and what can you do?
The unpredictability of the global economy and the public reaction to it does not allow traders to trust forecasts and predictions. In these turbulent times, traders need to be aware of what is happening and be able to understand how economic events can have an impact on their commercial positions. This means that it is always good to take a step back to analyze market movements from all points of view.
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