The least we can describe 2022 is that it is a year of fluctuations, as no asset class, from stocks to bitcoin to commodity and currency markets, knew the meaning of calm during the past year, after the Russian-Ukrainian war caused many geopolitical and economic turmoil that affected the whole world.

As for the stock market, it was a painful year, as US stock indices suffered the worst annual performance since 2008 and snapped a series of gains that lasted for about 3 years, after accelerating inflation and high interest rates weakened investor sentiment, especially in technology stocks that witnessed a sharp selling wave.

Gold prices also lost their luster with the rise of the dollar after the Federal Reserve raised interest rates 7 times in 2022, to control inflation, while bitcoin was the biggest loser and suffered a heavy blow that pushed it to its lowest level in two years.

Although it lost most of its gains, oil prices were among the most prominent gainers in the past year, with fears of supply shortages sparked by Russia's invasion of Ukraine.

stock markets

The policy of the Federal Reserve and the Russian invasion of Ukraine weighed more heavily on the global stock market than even the shock of the Corona epidemic, so that 2022 would be its worst year in 14 years, led by technology stocks that tasted the bitterness of high interest rates and inflation rates.

The US Federal Reserve pursued a strict monetary policy and raised interest rates at a pace not seen in many years; Among the 7 increases approved by the bank this year, there are 4 consecutive increases of 75 basis points, bringing the US interest rate to a range of 4.25% and 4.50%, with expectations of its rise to 5.1% in 2023.

The Federal Reserve declared war on inflation, after it reached the highest level in 4 decades during the past year, with the disruptions of global supply chains and the repercussions of the Russian-Ukrainian war, which pushed energy prices in particular to unprecedented levels.

The Nasdaq Technology Index was the biggest loss among Wall Street indices, as it declined by more than 38% over the past year, to trade at 10,400 thousand points, which means a significant drop from its peak above 16 thousand points in November 2021, with the fact that technology stocks are more Sensitivity to rising interest rates, as it hurts expected future earnings and makes borrowing more expensive.

The Standard & Poor's index also recorded annual losses of about 19.4%, to end the year at 3800 points, with a significant decline in the shares of the telecommunications services sector as well as the consumer goods sector, while the shares of energy companies were the only winners during 2022, with gains of approximately 60%, with the rise in oil prices. and natural gas.

While the Dow Jones Industrial Average fell by nearly 9% during 2022, recording a level of 33,147 thousand points by the end of the year, to be the least declining among the three indices, as its rise of more than 15% in the fourth quarter reduced its annual losses, with the US Federal Reserve’s tendency to reduce the pace of raise interest.

*Dow Jones performance in 2022

Wall Street indices witnessed sharp fluctuations in 2022, as the Dow Jones fell less than 29,000 points at the end of September, which was the lowest level in nearly two years. The same applies to the Standard & Poor’s index before recovering in the last quarter, after 3 quarters of losses. Unlike the Nasdaq, which recorded its fourth consecutive quarterly losses for the first time since 2001.

And at the level of shares of giant companies, none of them could avoid strong losses last year, as Apple’s share fell 27% in the total of 2022, and the market value barely stuck to the $ 2 trillion mark, as it ended the year at $ 2.07 trillion, after it was about to exceed 3 trillion. dollars in late 2021.

The selling wave affected all technology stocks, as Facebook’s share fell by 64%, and the company became outside the list of the 20 largest global companies by market value, with disappointing financial performance, due to increased spending on the Metaverse project, and Amazon and Microsoft shares recorded annual losses of about 50%. % and 28%, respectively.

And let's not forget the strong blow that Tesla's stock received in 2022, as it declined by more than 65%, bringing the market value to less than $400 billion by the end of the year, compared to $1 trillion last April, as investor sentiment declined towards the electric car giant's shares, after its founder acquired Elon Musk on Twitter.

Oil prices

As for the oil market, it witnessed sharp fluctuations in 2022, with the availability of supportive factors led by the Russian invasion of Ukraine and the subsequent shortage of supplies, as well as negative factors with the slowdown in economic growth and the return of Corona infections in China, which led to a decline in demand for crude.

The oil price movements during the past year were full of sharp rises and falls, as it witnessed a rocket rise in the aftermath of the Russian-Ukrainian war, and the price of Brent crude approached the barrier of $140 a barrel for the first time since 2008 in early March, and this coincided with the announcement by the United States and the United Kingdom to ban oil imports. Russia, in addition to the commitment of the OPEC + coalition to gradually increase oil production.

Oil prices have taken a downward path since then, punctuated by a rise in Brent crude above $120 last June with the European Union announcing a ban on imports of Russian crude starting on December 5, but this rise did not last long with fears of a slowdown in demand for crude.

And crude prices suffered in the second half of 2022, from fears of economic recession due to the continuous interest rate increases, in addition to the high Corona injuries in China, the largest importer of crude in the year, to the extent that it erased all its gains from the invasion of Ukraine, after Brent crude fell to $ 76 by the end of the session. (Dec 9), recording the lowest close in 2022.

Oil prices began to rise again and exceeded $80 in December, after the OPEC+ alliance insisted on reducing production by two million barrels per day from November 2022 to December 2023, in response to demand concerns, as well as the European embargo on Russian oil entering into force.

As a result, Brent crude achieved an annual gain of more than 10%, and US Nymex crude rose by 6.7%, but these gains are small compared to a rise of 50% for both crudes in 2021.

*Brent crude price movements in 2022

 

gold prices

Despite the geopolitical and economic turmoil that supports the rise of gold in 2022, the rise in the US dollar and Treasury bond yields, along with the increase in interest rates, formed a headwind for the precious metal last year.

The US dollar reached its highest level in more than 20 years, which made gold more expensive for holders of other currencies, and US bond yields rose to the highest level in 14 years, which increased the opportunity cost of holding the non-yielding yellow metal.

Despite this, gold prices recorded slight losses of 0.1% in 2022, thanks to the strong rise in the last two months, after the Federal Reserve began to reduce the pace of interest rate increases, which supported the dollar and US bond yields to decline and provided support for the yellow metal.

However, these slight losses do not reflect the strong fluctuations witnessed by the precious metal in 2022, as prices took an upward path at the beginning of 2022 and exceeded the level of $ 1900 an ounce in late February with the start of the Russian-Ukrainian war, before breaking the barrier of $ 2000 an ounce in early March, recording the highest level since August 2020.

Despite this, as soon as the Federal Reserve started raising interest rates last March, gold prices witnessed a sharp decline that pushed them to their lowest level in two years in September at $1,630 an ounce and again in early November, before significantly recovering from their losses in the last leg of 2022. , and back above $1,800 but that wasn't enough to end the year in the green.

*Gold's performance in 2022

 

cryptocurrency

Cryptocurrencies were the biggest losers among the different asset classes in 2022, and all the hopes of their bulls were dashed, especially after the strong gains they achieved in the previous year, amid companies and financial institutions rushing to recognize Bitcoin and its companions, but the situation turned upside down last year.

The general cryptocurrency market started with a market capitalization of more than $2 trillion, but it ended just above $800 billion, which indicates the huge losses that digital currencies have received, led by Bitcoin alone, which lost 65% of its value in 2022, and Ethereum also fell by almost 70%. .

*Bitcoin movements in 2022

In early 2022, Bitcoin exceeded the level of $48,000 before witnessing sharp fluctuations in the first months, pushing it to less than $34,000 before it reached $47,000 at the end of March as the Russian-Ukrainian war raged, but it has taken a relentless downward trend since then.

Bitcoin was greatly affected by global market losses with high interest rates, and the flight of investors to safe havens such as the US dollar, in addition to the collapse of many platforms and cryptocurrencies in 2022, which raised doubts among investors about the financial solvency of companies operating in this sector.

And last June, bitcoin fell below the $20,000 level for the first time since early 2020, then fell to less than $16,000 in November, before settling above these levels until the end of the year, to be down by nearly 75% since the record level recorded in November 2021. Close to $69,000.

The bankruptcy of the FTX platform last November was a severe blow to Bitcoin and its companions in 2022, with fears of the spread of the collapse infection to the rest of the cryptocurrency companies and platforms, and the impact of this continues until now.

Despite the black space in 2022 that pervaded the scene in various financial markets, we hope that the year 2023 will bring us optimism for a better tomorrow and goodness for all our friends who follow the Namazon economic website and the meaningful content we offer

Iyad Aref

Founder of the economic site Namazon