In less than 10 months, stock indexes have lost all those privileges they gained after the elections of 2016. Although pessimists warned of a bubble, the optimists’ beliefs pushed quotes up. Analysts believe that the formal cause of this is the publication of unsatisfactory financial reports, although this is about a retracement to reach equilibrium of the market.
Shares of Apple and Goldman Sachs are among the drawdown leaders of the last week.
Following Facebook, whose shares keep falling against the background of the unsatisfactory financial results and scandals about Mr. Mark Zuckerberg, the Apple’s shares have crashed too. This technological giant has lost more than 5% after several component-supplying companies, including Lumentum, had dampened their forecasts for the next quarter.
Lumentum – is one of the corporation’s main suppliers, whose components are used in the Face ID technology, related to the Apple smartphones. Weak financial reports and negative forecasts declined the company’s shares by 33%, which immediately affected the Apple’s shares. Moreover, a number of microchip suppliers, which also do business with technological corporations, have lost around 1-4%. The decline of the Apple’s quotes was one of the main reasons for NASDAQ index to drawdown by almost 2%.
If one of the reasons for the drawdown of NASDAQ index was the Apple’s shares, then Dow Jones index has lost more than 2% because of the shares of Goldman Sachs. On 1st of November, mass media released the information about the suspension from of work of the former head of the Asian Division Mr. Andrea Wellu, who had previously been downgraded in view of the scandal about 1MDB Malaysian State Investment Fund. Following the result of the investigation, the Malaysian State Investment Fund had been implicated in some corruption cases, involving top managers of Goldman Sachs.
The first scandal broke out back in 2015, when some information on the possible unauthorized transfer of around 700 million US dollars to the accounts of the former prime minister of Malaysia surfaced. The investigations had been carried out in at least 10 countries for more than three years. According to the information from the US Department of Justice, which was conducting an independent investigation on its territory, the top managers of the Asian Division of Goldman Sachs aided by the country’s government, had embezzled and laundered around 3.5 billion US dollars. In September 2018, the ex-prime minister was arrested on charges of violations of the country’s tax legislation.
Shares of Goldman Sachs has declined by almost 7.5% after the current minister of finance of Malaysia had stated about the government’s plans to charge Goldman Sachs with all fees that had been paid to the bank in compensation for the transactions it made for 1MDB totaling several dozens of BUSD.
There is no sense to expect any growth of stock markets for the following reasons:
- Markets are full of negative information, which brings bearish trends for the quotes of indexes;
- Deceleration of the US GDP growth will slow down both currency and stock markets;
- The US stock market is overvalued and has no fundamental factors for further growth in the coming month.
Traders can consider some earning options on separate shares of companies. For example, it could be companies from biotechnological sector. But taking into consideration the total stagnation, such the strategy is quite risky.