A cocktail containing higher US Q3 GDP knowledge, together with constructive omicron headlines additional inoculated monetary markets in opposition to a year-end sell-off in a single day, says Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA
“Largely, it was Scottish and Imperial Faculty London’s research that again up preliminary South African knowledge, suggesting that omicron is much extra contagious than delta, however a lot much less prone to put you in hospital. In fact, with case numbers exploding the world over, the sheer quantity of omicron instances signifies that for well being programs, omicron may mathematically and statistically be a zero-sum sport versus omicron.
“Markets don’t concern themselves with these types of “slapping you within the face” particulars if the headlines agree with the narrative that they need to hear. Unsurprisingly in New York, subsequently, equities powered increased together with oil, and the US Greenback staged a pointy retreat as defensive positioning was unwound, though the bond market was sharply unchanged. So, markets and buyers will get their “Santa/Christmas rally” by the seems of it. On a private stage, it’s the solely query I’ve been requested all week. It has turn into so annoying that I’ve contemplated breaking wrapped Christmas presents and taking scissors to smooth toys.
“From right here, we’re in all probability going to want some extra omicron headlines alongside the strains of hospitalisations and deaths soar with whole instances to show the markets from their perpetual, central financial institution QE-induced perpetual buy-the-dip in the whole lot course. The info calendar within the US sees jobless claims, sturdy items and private spending and earnings launched tonight, the final main dataset to be launched globally for this 12 months. It will take a severe unfavourable divergence by the info to upset the applecart of bulls, and certain solely quickly.
“Thereafter, we will probably be left to the tender mercies of omicron headlines till the brand new 12 months, and even that efficiency now seems to be fading. Solely Vladimir Putin deciding to vacation over the Ukrainian border adjustments that narrative. Suppose a lot decrease equities, decrease the whole lot in Europe, $150 oil, a a lot increased Greenback and Swiss Franc with plunging treasury yields. However I don’t need to be the Grinch-ski who stole Christmas.
“In Asia, the calendar at present is lifeless with solely Singapore Inflation for November to alleviate the monotony. Greater than anticipated prints may put one other tightening by the MAS again on the desk and see native fairness weak point. In any other case, we’re in a hurry-up-and-wait mode in Asia at present.”