Monthly markets recap: Oil surges, Bitcoin struggles, big earnings hits

A busy start to the year saw oil head skywards, Bitcoin slumping, and earnings season kick off in earnest on Wall Street.

January 2021 markets recap

Oil heads towards seven-year high

Across January, oil prices were steadily ticking upwards.

Crude oil saw six consecutive weeks prior to the end of the month. Both WTI and Brent crude were running into resistance as February ticked over, but a $90 price doesn’t seem so far away.

So, why the surge? It’s our old friend supply and demand. While OPEC+ committed to further increases, many of its smaller members are coming up against capacity barriers. There may not be more to give. This leaves smaller OPEC producers vulnerable to price fluctuations and supply snags moving forward.

Still, projections for global oil demand are good. It’s just a question of delivering that, and the high prices now suggest that there still might not be enough oil to go round.

Geopolitics, as ever, is playing its part in supporting crude prices. We had nearly a full blow revolution on our hands in Kazakhstan, which sent alarm bells ringing in China and Central Asia. Output at some of Kazakhstan’s largest fields fell and may take a while to recover, despite CNPC investment and interest.

The Ukraine/Russia tensions caused, and continue to cause, crude traders to price in potential loss in Russian production and export volumes. We know armed conflicts consume oil like crazy. If the febrile situation turns hot, then Russia will need to supply its army with as much crude as it can drink. It may also feel the economic wrath of US-led sanctions, which will seek to strangle Russia and its key industries.

Either way, oil prices are closing in on seven-year highs due to all the various moving factors at play. February will be a very interesting month for oil traders.

Bitcoin struggled all month

We were asking at the tail end of January if the crypto crash was over.

Bitcoin and many leading altcoins, such as Ethereum, were hit hard by the drastic drop in tech stocks and Nasdaq underperformance. Investors saw fit to divest themselves of risky assets with cryptocurrencies on the chopping block.

BTC was struggling to break out of the $42,000 range but has subsequently dropped further. At the end of January, the token had reached a low of $36,605, with a mid-month low of $32,898. Given the token started the year chasing $50,000, and it had reached an all-time high of around $69,000, the token has fallen rather far.

The White House and other organisations, such as the SEC, Bank of England, and European Central Bank, are expected to create a tougher regulatory framework for cryptocurrencies this year. Many investors are getting jitters over what this actually means.

It should really limit scams and the volatility that has come to characterise cryptocurrency trading this year.

Many are desperate to limit Bitcoin mining’s environmental impact. Senator Elizabeth Warren, for example, has called on six major US-based miners to explain their energy use. With commodities and energy prices rising, and Bitcoin mining alone annually consuming more power than the whole of Sweden, something has to give.

That something is apparently token prices. However, we have seen major peaks and troughs for digital tokens across the year, so it might not pay to be too disheartened, but you could be in for a wild ride in 2022.

Earnings season brings lows and highs for tech firms

Q4 2021 earnings season kicked off at the end of the month. Another few weeks of Wall Street earnings reports are upon us.

As ever, there have been some big winners and some big losers.

Starting with the losers, Facebook saw its shares slump dramatically after reporting an earnings miss. The social media’s metaverse obsession and competition from other platforms led to the first quarterly drop in daily and monthly active users. Shares were down 20% with a weak first quarter of 2022 predicted too.

Steaming service Netflix also posted saw its share price slide after recording slowing subscriber growth. While the company did post a revenue and earnings beat, the drop in subscriber numbers caused investors to be wary of the streaming service’s future prospects.

On the plus side, Apple recorded another record-breaking quarter, managing to overcome logistical issues with the successful launch of iPhone 12 and a new MacBook model. Shares were up 11% after the tech giant’s earnings announcement.

Tesla was back in the driving seat too with a fourth consecutive earnings-beating quarter. Again batting off chipset supply constraints, Elon Musk’s EV poster boy pushed on with cranking out more cars. Watch for an increased level of Model and Model 3’s hitting roads this year, but still no Cybertruck or $25,000 Tesla.

Be sure to check out our earnings calendar to see who is reporting and when this earnings season.

2022 IPO watch

Our Chief Markets Analyst Neil Wilson was busy at the start of the year, compiling a quick list of some of 2022’s must-watch IPOs.

Virgin Atlantic, Monzo, and PureGym are all slated to go public this year. Be sure to keep checking back as these stories unfold and we get more concrete information on these and more initial public offerings.