News Recap: US equity markets ended the week lower on new concerns about the omicron variant of COVID-19 and a weaker than expected jobs report

US equity markets ended the week lower on new concerns about the omicron variant of COVID-19 and a weaker than expected jobs report. The omicron is spreading and may be more contagious than the delta variant sent stocks tumbling. Shares of cruise lines and airlines declined. Tech stocks were hard hit as well, with some of the biggest names in the sector falling. Market sentiment was also negatively impacted by the Labour Department report that just 210,000 jobs were created in November, well below economist’s forecasts and the fewest of any month in 2021.

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News Recap: Traders will be on high alert for a number of key economic reports including the Fed’s Beige Book on Wednesday and the NFP report on Friday

Stock prices in London are seen to recover some of Friday’s sharp losses early on Monday opening session as markets continue to grapple with a new coronavirus variant. Global stock markets tanked on Friday, with overnight Asia session extending losses into the new week, after this new Covid-19 strain now known as Omicron cast doubt on global efforts to fight the pandemic, due to fears that it is highly infectious and could potentially evade vaccines. The new variant, on top of a rebound in case counts and widening restrictions in Europe, threaten to put a damper on the global economic recovery. Another widespread shutdown could put the already overstrained global supply chain into deeper trouble.

Several countries have announced plans to restrict travel from southern Africa, where it was first detected, including key travel hub Qatar, the US, Britain, Saudi Arabia, Kuwait and the Netherlands. But the virus strain has already slipped through the net and has now been found everywhere from the Netherlands to Hong Kong. In Australia, authorities on Sunday said they had detected it for the first time in two passengers from southern Africa who were tested after flying into Sydney.

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News Recap: Trading activity in equity markets is expected to quieten down as investors get ready for Thanksgiving Day on Thursday

Stocks in London are set to open lower on Tuesday, as concern over growing cases of Covid-19 in Europe overshadows Monday’s news that US President Joe Biden has confirmed Jerome Powell as chair of the world’s most influential central bank. Fed Chair Powell was getting the nod for another 4-year term leading the US Federal Reserve was the catalyst that managed to pull European stocks back off their lows of the day yesterday. Although it was not enough to pull the likes of the DAX and CAC40 into the green. Europe’s return to the pandemic’s epicentre has been blamed on a sluggish vaccine uptake in some nations, the highly contagious Delta variant, and colder weather moving people indoors again.

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News Recap: Bitcoin rose to a two week peak on Monday and ether climbed to a fresh record as cryptocurrencies ride higher on a wave of momentum

A weak performance by Asian equity markets overnight, despite upbeat economic data from China at the weekend. The weekend data brought a sharp increase in the trade surplus as export growth outstripped imports. A 27.1% rise in October exports does help reduce some of the fears around supply chain issues and energy-induced shutdowns. In the US, the Democrats have managed to agree upon the $1 trillion infrastructure package pushed by Biden, with the President expected to sign off on the bill.

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News Recap: US equities currently remain near or at all-time highs

Markets in Asia started the week with a negative bias as the region followed on from last Friday’s US session although sentiment began to improve as participants looked towards the opening of European markets. The ASX 200 was higher by around 0.4% supported by gains in the energy sector whilst the Nikkei 225 slumped close to 1% with Softbank and Fast Retailing being the biggest losers. In China, a spokesperson for the National Health Commission outlined that the most recent Covid outbreak covers 11 provinces with cases expected to rise further.

UK Focus

In the UK, Chancellor Sunak is set to announce the UK Budget later in the week and has cited that inflation and interest rates have been key factors to bear in mind ahead of the release. Sunak has reiterated that there must not be a return to significant economic restrictions despite the number of cases continuing to rise as the nation heads into the Winter period. The budget on Wednesday is set to see the minimum wage raised whilst restrictions on public sector pay lifted.

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News Recap: The Pound continues to see good economic data releases and UK inflation is still running at high levels

Last week saw the return of optimism in the markets. Inflation is still at elevated levels and the supply chain remains a concern, but the markets seem to believe that these issues will eventually be resolved.

The big question is still what actions will be taken by central banks, and what effect they will have on risk assets. The Pound continues to see good economic data releases and UK inflation is still running at high levels. The market is pricing a full 15bp hike in next month’s meeting and more in February 2022, and this has risks.

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News Recap: Bitcoin also performed well alongside traditional markets in the past 7 days as it broke and remains above $55,000 on strong fundamentals

Last week was Non-Farm Payrolls week and it was yet another highly anticipated data release. In the end, the headline number was weaker than expected but that apparently didn’t seem to be enough to take the Fed off its tapering course. The RBNZ became the second major central bank to hike rates as expected, and there were no major surprises to shock markets either way.

The US Dollar finally took a breather after a few strong weeks, with the NFP reading putting a brake on its appreciation. The Euro failed to make any progress, hindered mainly by the terrible German economic data releases which included factory orders and industrial production was huge misses. The Pound had a decent week as bets start favouring an earlier rate hike by the Bank of England. With the strength in inflation and wage growth running past expectations, it seems that the BoE has very few options left. Commodity currencies did well on the whole, as oil continued its impressive bull run.

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News Recap: traders will await the outcome of central bank meetings taking place this week

Last week saw market participants digest a wave of central bank commentary as several FED members delivered speeches providing their own views on monetary policy, inflation, and tapering. The US Dollar was lifted higher by the rally in treasury yields which saw USD/JPY briefly test the 112.00 level. EUR/USD slumped below 1.1600 before paring the losses towards the end of the week as financiers and investors looked towards a new month and quarter. Equities ended the month of September in the red with the SPX and Dow Jones snapping a 7-month win streak.

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News Recap: Bitcoin traded lower last week as participants reacted to negative news from authorities in China

Last week saw market participants digest the outcomes of the wave of Central Bank meetings which included the FOMC. The Central Bank gave notice that if progress on its economic goals continued as expected then a reduction in the pace of asset purchases may be warranted. The news sent the greenback higher as it surged to its best levels since the 20th of August. In addition to this, the FED now sees a total of seven rate hikes over its current forecast horizon whilst the views on the labour market were broadly maintained. Market participants were surprised by Fed Chair Powells’ comments as he noted that the tapering of asset purchases could be concluded by the middle of next year if the economy remains on track. Moving forward, financiers and investors will now await the next meeting in November for a possible taper announcement.

Asia News

Markets in Asia began the week mixed as the region rallied somewhat on reopening headlines but struggled to climb further with market participants weary of month and quarter end. The ASX 200 closed higher by 0.7% with outperformance seen within mining related sectors.  The Nikkei 225 was unchanged with investors treading cautiously ahead of the upcoming LDP leadership race.

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News Recap: The week ahead will see several major Central Bank meetings as financiers and investors remain cautious over the path of the economic recovery.

Last week saw market participants digest a wave of US data which included a strong retail sales print. The greenback surged above the 93.00 as market participants look towards this week’s FOMC Meeting for further guidance and direction regarding the impending taper announcement. Commodity currencies were on the pressured as the week progressed with Australia reporting a loss of over 140,000 jobs in the past month. The week ahead will see several major Central Bank meetings as financiers and investors remain cautious over the path of the economic recovery.

Asia News

Markets in Asia began the week negatively amid the Evergrande concerns and a continued slump in commodities. Risk appetite was on the backfoot with a few holiday closures in the region and a busy Central Bank focused week ahead. The Hang Seng dropped nearly 5% whilst Evergrande plunged by another 17% on growing default fears. It has been reported that the company who currently owe over $120mln in bond coupon payments have been repaying investors with discounted real estate. The ASX 200 was lower by around 2% as underperformance in mining names and ongoing woes in commodities spooked market participants.

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