FxPro Financial Services Ltd | Sep 13, 2021 05:20AM ET
Demand for risk assets in financial markets continues to shrink with two significant drivers. Firstly, sentiment is undermined by the sustained sell-off in equities that dominated the week during the US trading session. Secondly, China is not backing down on its ideas to limit the strength of the big technology corporations, while the US court decision bit off some profit from Apple (NASDAQ:AAPL).
The S&P 500 came under pressure during the New York session on Friday, intensifying towards the close of trading, reflecting the wariness of professional managers. The index is again a couple of steps away from its 50-day moving average. The index has fallen to this line around the middle of each month since May, and each time it finds support on dips there.
That said, the markets have a lot to worry about. Two of the world's largest economies are in sync with pressure on their fintech giants. Access to user data and the growth of ecosystems have effectively created new monopolists that have lately been profiting lavishly from this information themselves and preventing others from doing so.
In 2007, the phrase "too big to fail" became widespread as the government bailed out big banks and manufacturing companies. Now we are witnessing a U-turn, with governments intent on raising taxes on corporations and limiting their monopoly in certain sectors or crushing companies that have become frighteningly large for even the US and Chinese governments, the world's two largest economies by a wide margin.
At the same time, fintech is also under pressure in the US. On Friday, Apple lost a lawsuit with Epic Games and must now allow companies to use payment services to bypass those approved on the AppStore. This will result in a loss of billions of dollars a year in revenue. Investors fear that this could be the start of a big wave of pressure on fintech, which has concentrated control first over user data, then over financial flows, and has already started profiting from this information.
The FxPro Analyst Team
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