InvestMacro

by JustForex

Omicron’s latest research suggests that the new strain of the coronavirus is less dangerous than expected. The US stock indices closed higher on Monday as easing concerns about the impact of the Omicron Covid-19 strain resumed investor views on cyclical and technology stocks. At the close of the stock exchange, the Dow Jones Industrial Average (US30) increased by 1.87%, the S&P 500 Index (US500) added 1.17% and the Nasdaq Composite Index (US100) increased by 0.93%.

Tesla CEO Elon Musk said that the US Congress should not approve the Biden administration’s bill to increase subsidies for electric cars, saying that the proposal would worsen the country’s budget deficit.

The Securities and Exchange Commission (SEC) launched an investigation into Tesla’s solar panels due to their possible spontaneous self-burning. Shares of Lucid Group fell 5.1% yesterday after it was reported that SEC had sued the electric car maker Lucid over a deal that took the company public this summer.

The European stock market closed in the green area yesterday. Investors have started to move funds from safe-haven assets to the stock market as Omicron risks have decreased and stock prices are at good levels now. Germany’s DAX (DE40) increased by 1.4%, Britain’s FTSE 100 (UK100) added 1.54%, France’s CAC40 (FR40) gained by 1.5%, and Spain’s IBEX (ES35) jumped by 2.4%. In Germany, electricity prices are approaching a new record. Germany’s industrial production increased sharply by 2.8% last month, while analysts had expected a 0.8% increase.

The capitalization of the Airbus aircraft manufacturing group rose by 4.6%. The company’s helicopter division received an order to supply 26 helicopters for Saudi Arabia during French President Emmanuel Macron’s visit to Riyadh.

Carbon prices reached a new high of 81.64 euros per ton. Carbon is up nearly 150% this year.

China has eased its monetary policy by cutting reserve requirements for banks for the second time in 2021. The People’s Bank of China will cut the reserve requirement ratio for most banks by 0.5 percentage points next week.

Asia-Pacific stock markets rose in Tuesday’s trading, following the positive dynamics of US and European stock indexes. Japan’s Nikkei 225 Index (JP225) gained 1.89%, Hong Kong’s Hang Seng (HK50) jumped by 2.48%, and Australia’s ASX 200 (AU200) added 0.95%.

Shares of Japan’s largest bank, SoftBank, fell by 8% yesterday and decreased for the 7th straight day on the delisting of Didi and after the US Federal Trade Commission decided to block the sale of Arm to Nvidia.

Shares of Chinese real estate developer China Evergrande fell about 14% to a May 2010 low amid indications that China Evergrande may officially default. The company is due to pay investors about $10 billion in bonds in January.

The Russian ruble is falling since the US and European allies weigh sanctions targeting major Russian banks and officials if Russia begins the invasion of Ukraine. A video call between US President Joe Biden and Russian President Vladimir Putin over the situation on the border with Ukraine will take place today.

Australia’s central bank expectedly kept its key interest rate at a record low of 0.1% and kept its bond-buying program unchanged. The stimulus program is scheduled to be cut in February 2022.

Main market quotes:

S&P 500 (F) (US500) 4,591.67 +53.24 (+1.17%)

Dow Jones (US30) 35,227.03 +646.95 (+1.87%)

DAX (DE40) 15,380.79 +210.81 (+1.39%)

FTSE 100 (UK100) 7,232.28 +109.96 (+1.54%)

USD Index 96.28 +0.16 (+0.17%)

• – Australia RBA Interest Rate Decision (m/m) at 05:30 (GMT+2);
• – Australia RBA Rate Statement (m/m) at 05:30 (GMT+2);
• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – Germany ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By Orbex

After the last RBA meeting, there was a bullish outlook for the AUD. The Reserve Bank upgraded its targets and brought forward their guidance for when rates might lift off. The economy looked like it was back on solid footing after the lockdowns had been lifted.

Now, most of the headlines going into the RBA meeting are talking about the threat from the omicron variant. That said, the Reserve Bank might have a more cautious outlook and tone down some of the optimism following the last meeting.

The fact that Australia confirmed its first case of community spread of omicron didn’t help matters. Nonetheless, just because the press is talking a lot about it, that doesn’t mean it’s what the RBA will be most focused on.

To lockdown or not to lockdown

The main issue with a resurgence of a new variant, of course, is whether it will cause a new round of lockdowns.

However, that’s not a monetary policy decision. The RBA is likely to focus on the underlying data, and not try to pre-guess what the state authorities will do. So far, both Victoria and ACT premiers have insisted that they won’t go into lockdown again.

To be sure, the RBA can hedge potential uncertainty. However, by providing a pessimistic view ahead of the summer, they could actually hurt the economic outlook and contradict their efforts to support growth.

If the RBA is worried about the possibility of another economic hit, that could keep investors on hold, and cause an economic hit. Without any concrete measures regarding omicron, there is good reason for the RBA to stay on course.

What to expect

There is a unanimous agreement among analysts that the RBA will keep its policy unchanged at the upcoming meeting. Any potential impact to the markets will likely come from any changes in the language regarding the outlook.

However, the RBA just recently updated their projections at the last meeting. And there is a consensus that they will likely wait to see the impact. Without a press conference scheduled for after the meeting, there is little chance that any questions could rile up the markets as well.

In other words, everything is pointing to the meeting being a non-event. That is except with all the commentary about the new variant there might have been some pre-adjustment in the market.

So, an across-the-board affirmation of the outlook by the RBA might provide a little bit of a boost for the AUD, as it would help calm some of the uncertainty.

Where could the AUD go?

The RBA’s likelihood to keep things on hold doesn’t mean the AUD is out of the woods. The general loss of risk sentiment, combined with an expectation that central banks aren’t about to change their guidance, is likely to keep weighing on commodity currencies.

A weaker AUD also contributes to higher inflation in the country. And that’s a further reason for the RBA to keep its outlook steady.

Even if it doesn’t play a role in the RBA meeting, omicron is likely to keep being the major factor driving the Aussie. Any positivity we get out of the monetary policy decision could quickly evaporate if there are further negative headlines on the virus front.

Article by Orbex

Orbex is a fully licensed broker that was established in 2011. Founded with a mission to serve its traders responsibly and provides traders with access to the world’s largest and most liquid financial markets. www.orbex.com

by JustForex

Last week on Friday, investors’ attention was focused on US nonfarm payrolls data. The labor market statistics were disappointing. The US economy added only 210,000 jobs in November (against 533,000 expected), while the unemployment rate decreased from 4.6% to 4.2%. Also, last week, Fed Chairman Jerome Powell said that the central bank will probably discuss reducing its stimulus program more quickly at its meeting later this month. A lot will depend on US inflation data due, which will be published later this week. Analysts are predicting a rise in inflation to 6.7% in annual terms. The acceleration of inflation may strengthen expectations of a faster reduction of QE by the Fed. The US stock market fell again on Friday. By the close of the stock market, Dow Jones Index (US30) decreased by 0.17% (-4.14% for the week), S&P500 (US500) decreased by 0.84% (-2.27% for the week), and NASDAQ Technology Index (US100) lost 1.92% (-4.14% for the week) and became the fall leader among the major US indices. Stocks sold off due to the twin uncertainties over the Omicron strain and the prospect of a faster reduction in the Federal Reserve’s stimulus program.

The International Monetary Fund warned Friday that it would likely lower its global economic growth estimates because of a new variant of the coronavirus. The number of countries reporting cases of Omicron continues to grow. However, scientists are still unsure whether it is more contagious than other variants, how serious the disease is, and what level of protection existing vaccines provide. The emergence of Omicron has already hit financial markets and undermined the global economic recovery.

Also, the International Monetary Fund has asked the Federal Reserve to tighten monetary policy with a faster pace because of rising inflation risks.

According to Bank of America’s weekly report, falling equity markets, rising volatility, and the prospect of higher rates are classic signs of a market top. Volatility indicators also signal caution. Despite the volatility indicators in the US and Europe rebounding from the 2021 highs earlier last week, they remain well above average.

European stock indices also closed Friday in the red area. British FTSE 100 (UK100) decreased by 0.097% on Friday (+1.11% for the week), French CAC 40 (FR40) decreased by 0.44% (-0.32% for the week), German DAX (DE40) decreased by 0.61% (-1.13% for the week) and Spanish IBEX 35 (ES35) lost 0.71% and became the leader of the fall for the week with -2.56%. Germany will publish inflation data this week. As inflation in the region is rising, there are more and more calls for the ECB to tighten its monetary policy. However, the ECB has always been famous for its conservatism. That’s why analysts are confident that it is not worth waiting for the ECB to change its policy before spring 2022 even if inflation in the region continues to rise. The UK will release October GDP data this week ahead of the Bank of England’s December meeting. Recent UK economic data showed that the Bank of England may start to raise interest rates, but due to new uncertainty surrounding the Omicron strain, policymakers may decide to wait until early 2022 at the December meeting.

Oil prices increased more than $1 a barrel on Monday after Saudi Arabia, the largest exporter, raised the price of its crude oil sold to Asia and the United States, and because US and Iranian negotiations over a renewed nuclear deal appear to have stalled. The analyst expects oil prices to rise to $75 a barrel.

Asian markets traded in positive territory on Friday. Japan’s Nikkei 225 (JP225) gained  1.00% (-1.44% for the week), Hong Kong’s Hang Seng (HK50) increased by 0.093% (-0.60% for the week), and Australia’s S&P/ASX 200 (AU200) added 0.22% (+0.37% for the week). The Japanese yen continues to strengthen as a safe haven currency as uncertainty in the markets is still high due to the spread of the Omicron option, which has led to renewed restrictions in various countries and increased fears over possible stronger action from the Federal Reserve to curb inflation.

In the commodities market, lumber futures (+18%), cocoa (+2.92%), WTI crude (+2.58%), and Brent crude (+2.39%) showed the biggest gains by the end of the week. Futures on natural gas (-6.92%), sugar (-2.89%), and orange juice (-2.22%) showed the biggest drop.

Main market quotes:

S&P 500 (F) (US500) 4,538.43 −38.67 (−0.84%)

Dow Jones (US30) 34,580.08 −59.71 (−0.17%)

DAX (DE40) 15,169.98 −93.13 (−0.61%)

FTSE 100 (UK100) 7,122.32 −6.89 (−0.097%)

USD Index 96.15 +0.01 (+0.01%)

• – UK Construction PMI (m/m) at 11:30 (GMT+2).

by JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By The Market Research Team, ForexTime

Article by ForexTime

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