Tech, Housing, and Energy – What to Watch in Financial Markets

Tech, Housing, and Energy - What to Watch in Financial Markets

2021 has been another wild year for investors. A mix of unique factors has been thrown into the mix, creating a challenge for many people to know where’s best to focus their capital. Terrible interest rates, rising inflation, and a lack of other viable options has forced many investors into increasing their exposure to the stock market.

But a new wave of events is beginning to enter the fray, meaning we all need to again reassess our positions and strategies. Here are some of those factors. 

Housing

At the start of the year, the stranded container ship, the Ever Given, was causing havoc in the Suez Canal after getting beached for several days. This went far beyond just a delay for a couple of ships, it had knock-on effects for the entire global economy, causing shortages and price increases for many goods that remain partly in place today. 

As the year comes to a close, an entirely unrelated company with a comically coincidentally similar name threatens to affect the global economy and financial markets. The Chinese housing company Evergrande has already missed deadlines to make payments to bondholders and is likely to have more liquidity issues in the coming weeks and months. 

It’s uncertain as to whether the government will step in the prop it up or if it will be allowed to fend for itself. 

Some are calling this another “Lehman moment”, referring to the collapse of Lehman Brothers in 2008 which started the ball rolling on the very dramatic financial crisis that defined the final few years of the decade. Others are saying this is probably unlikely due to the fact that the company isn’t as intertwined with the global financial markets as Lehman was, though it’s still something investors need to keep an eye on. 

In other countries, rising property prices is continuing to be a problem for many homebuyers as they struggle to find affordable places to live. With low interest rates and an already overpriced stock market, it’s unlikely this will change any time soon as it makes property an attractive place to beat inflation. 

Housing

Tech

Tech companies carried the S&P 500 to record highs for much of 2020 and have continued to grow in value since then, albeit at a slower pace. Demand for the products and services of companies like Microsoft, Apple, and Amazon has not waned and doesn’t look like it will anytime soon. 

Gaming companies have, until recently, also fared very well as their content continues to appeal to even more people around the world. Since August, their share prices have dropped quite heavily after it was reported that there would be a temporary suspension on new games being approved for release in the Chinese market. Of course, this will have a short-term impact, but it may also make these companies appear like good opportunities to bargain hunters. 

The iGaming industry, on the other hand, has enjoyed more success this year, building on the bumper 2020 that most of them had. Demand for online casino games like roulette continues to grow, especially as brands develop innovative variants like multiplayer and live modes that use the same numbered wheel and table as traditional versions but offer new ways for their customers to enjoy them. This trend isn’t showing any signs of relenting either, so could well continue into 2022. 

Energy

Energy is something we can’t do without, which is why it’s often good to have some exposure to the companies that produce it or the commodities they use in your portfolio. 

There are some significant shortages of gas and other fuels in several parts of the world, including Europe and China, though North America has avoided it to some degree. 

This is driving up prices for commodities like crude oil and natural gas. The Henry Hub natural gas spot price is trading more than 100% higher in October than it was in January, while the UK NBP spot price is around five times more expensive than it was at the start of the year. 

These changes will create winners and losers. The companies that extract fossil fuels have performed well, while consumer suppliers in the UK have been folding at an explosive rate due to their legal inability to charge higher prices.