Global Financial Markets Experience Sharp Volatility: Bitcoin Flash Crash Triggers Liquidations, Tech Stocks Diverge, and Non-Farm Payroll Data Takes Center Stage

Global Financial Markets Experience Sharp Volatility: Bitcoin Flash Crash Triggers Liquidations, Tech Stocks Diverge, and Non-Farm Payroll Data Takes Center StageThursday, December 5, 2023, saw complex and volatile conditions across global financial markets. All three major US stock indices closed lower: the Dow Jones Industrial Average fell 0

Global Financial Markets Experience Sharp Volatility: Bitcoin Flash Crash Triggers Liquidations, Tech Stocks Diverge, and Non-Farm Payroll Data Takes Center Stage

Thursday, December 5, 2023, saw complex and volatile conditions across global financial markets. All three major US stock indices closed lower: the Dow Jones Industrial Average fell 0.55%, the Nasdaq Composite dropped 0.18%, and the S&P 500 declined 0.19%. However, the performance of tech stocks showed significant divergence. Large-cap tech companies largely rose, with Tesla surging over 3% to a two-year high, TSMC, Microsoft, and Amazon each climbing over 1%, and Apple continuing its ascent to new historical highs. Conversely, the chip and semiconductor sector experienced widespread declines, with Intel falling over 5%, Micron Technology and Arm both dropping over 2%, and AMD, Qualcomm, and ASML also declining by over 1%.

The cryptocurrency market experienced even more dramatic volatility. CoinGlass data showed Bitcoin plunging sharply intraday, briefly falling to around $90,000 before quickly rebounding to approximately $97,000. This flash crash resulted in over 210,000 liquidations, totaling $1.098 billion. This event followed the announcement by Donald Trump that he would nominate pro-cryptocurrency advocate Paul Atkins to chair the Securities and Exchange Commission (SEC). Atkins has previously advocated for reduced cryptocurrency regulation, a statement initially driving significant price increases in cryptocurrencies, pushing Bitcoin above $100,000 to a peak near $105,000. COINGECKO co-founder Bobby Ong stated that Bitcoin surpassing $100,000 marked a significant moment for the cryptocurrency market, reflecting its increasing maturity, mainstream adoption, attracting new investors, and boosting market sentiment. However, this positive sentiment proved short-lived, leading to sharp price swings and ultimately, massive liquidations.

Beyond the volatile cryptocurrency market, US economic data dominated market attention. The US Department of Labor reported that initial jobless claims rose more than expected last week, reaching 224,000, exceeding the economists' average forecast of 215,000. While continuing jobless claims fell, market focus remained on the November non-farm payroll data due Friday. Wall Street economists anticipate an increase of 214,000 non-farm jobs in November. Economists generally believe the US needs to add 100,000 to 150,000 jobs monthly to maintain the current unemployment rate of around 4.1%. Whether the average of November and October data meets this expectation will significantly impact the market.

Meanwhile, a political crisis in France also impacted global market sentiment. The French National Assembly voted a no-confidence motion against the government, forcing Prime Minister Borne to resign. This marked the first time a French government has been overthrown by parliament since 1962. President Macron accepted Borne's resignation and tasked her cabinet with continuing day-to-day operations until a new prime minister is appointed. Some opposition figures criticized Macron for France's current political predicament and called for his resignation. The uncertainty surrounding this political event added to global market unease.

Regarding individual stock performance, beyond the aforementioned tech stock divergence, other sectors showed varied trends. Six of the eleven sectors in the S&P 500 index declined, while five rose. Materials and industrial sectors experienced the largest declines, at 1.40% and 1.21% respectively; consumer discretionary and consumer staples sectors saw the largest gains, at 0.95% and 0.39% respectively.

MicroStrategy's stock price fell 4.83%, partly retracting Wednesday's gains. The company is raising capital through high-priced stock issuance to purchase more Bitcoin, a strategy spearheaded by Chairman Michael Saylor. MicroStrategy's stock price has soared approximately 500% year-to-date, significantly outpacing Bitcoin's 125% increase. Nvidia's stock price fell slightly by 0.05%. Reports suggest TSMC is negotiating with Nvidia regarding the production of Blackwell AI chips at TSMC's new Arizona factory, with preparations for early next year production underway. Nvidia CEO Jensen Huang stated that demand for Blackwell chips is high, anticipating supply shortages for several quarters. Additionally, Nvidia will establish an AI center in Vietnam, expanding its Southeast Asia presence.

Meta's stock price closed down 0.79%. Meta Platforms announced on Wednesday plans to invest $10 billion in a 4 million-square-foot AI data center in Louisiana, which will be its largest globally. To meet the data center's power needs, utility company Entergy will add clean power generation to its system.

Tesla's stock price rose 3.23%, reaching its highest point since April 2022, with several brokerages raising their price targets. Bank of America raised its target price from $350 to $400, maintaining a buy rating. Bank of America analyst John Murphy, after visiting Musk's Austin, Texas gigafactory, expressed confidence in its growth prospects beyond 2025.

Amazon's stock price increased by 1.10%. Amazon announced on Thursday the successful completion of initial drone delivery tests in Italy and will continue working with Italian authorities to meet all requirements for launching the service next year. The company aims to start drone deliveries in Italy and the UK by the end of 2024.

Energy stocks saw slight gains, with Petrobras rising nearly 2%, and ConocoPhillips nearing 1%. Chevron, ExxonMobil, Murphy Oil, Shell, and BP (US) saw modest increases, while Occidental Petroleum fell slightly, and US Energy declined by over 1%.

Popular Chinese stocks listed in the US showed mixed results on Thursday, with the Nasdaq Golden Dragon China Index (HXC) closing up 0.42%. Faraday Future rose over 6%, Bit Mining over 5%, and New Oxygen, Miniso over 4%. Full Truck Alliance and Xiaomi (ADR) climbed over 2%, JD.com and Baidu over 1%. Trip.com, Li Auto, Bilibili, NetEase Cloud Music, Pinduoduo, and Nio saw slight increases; Tuniu and 36Kr fell over 10%, iQiyi over 2%, and XPeng, New Oriental, and RLX Technology over 1%. Alibaba, Zhihu, NetEase, and VIP.com saw minor declines.

In summary, Thursday's global financial markets showed significant volatility, influenced by multiple factors including substantial cryptocurrency market fluctuations, US economic data, and the political crisis in France. Market participants should closely monitor the upcoming non-farm payroll data and other potential risk factors to better navigate market uncertainty.