ARKK ETF takes the pain of higher interest rates

In this week's Macro Insight I discussed...


Low earnings, high growth tech stocks took a big hit last week on higher US rates. The ARKK Innovation ETF founded by Cathie Woods took a particular beating due to the longer duration of their projected cashflows. NDX PE ratios are down from 30 to 26, but may have more room to fall if yields continue towards 2.00%. Jay Powell did very little to calm bond markets down last week at 10Y yield hit 1.60%. China also showing signs of weakness triggering intervention in their stock market this week.


NDX CHART - NASDAQ sliced through key technical support levels last week as retail money got trapped in crowded tech names. I would be cautious to buy the dip just yet, given the backdrop for higher yields is still in place. 12800 key upside level to recover, whilst downside target is around 11800. Dealers are short QQQ gamma which is likely to keep markets choppy, especially in the tech sector.


Oil breaks higher on OPEC+ and weekend drone attacks on Saudi oil facility. GOLD slides down to key support zone at 1670 and stages impressive rally. I still think Gold will likely go lower as yields in the US approach 2.00% over coming months.


Finally base metals saw some selling after inventories at LME came in higher than expected. Both Nickel and Copper saw big sell offs down to levels not seen for months. Long term I think this offers good entry points given the positive fundamental backdrop in commodities. In the short term however, China weakness could be a factor and drive a longer correction.


Filmed on on Tuesday 9th March 2021.

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