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Daily Wrap Up 30 December 2021

30 Dec 2021 04:34 PM

Bulls remain in control despite omicron headlines

Stocks are largely in positive territory as traders continue to shake off the headlines about the rising number of patients with the omicron variant of the Covid-19 virus. It is worrying that case numbers are high, but the low hospitalisation rates are determining the mood in the markets.

The pandemic has taken many twists and turns in the past two years, but ultimately the fear comes from the possibility of restrictions being imposed, and for the time being, it doesn’t seem as if governments are close to taking action that could cause major disruption to economies. At the beginning of the month, stocks were undergoing painful declines on account of skyrocketing case numbers, but when it because clear that hospitals were not going to be overrun by the new strain, traders were quick to pull a U-turn, and start snapping up stocks again. Recently, the FTSE 100 hit a 22-month high, and the DAX hit is highest mark in one month. Today, the mood is a little muted, but indices are still at elevated levels. Over in the US, sentiment is more bullish as we have seen record highs on the Dow Jones and the S&P 500.

GBP/USD hit its highest mark since mid-November today. Sterling has been trending higher since the Bank of England unexpectedly hiked rates last month. Also playing into the mix is the relatively subdued US dollar. Last month, the greenback hit a 17-month high in the immediate aftermath of the Federal Reserve meeting, but since then it has been rangebound. Although the US dollar has yet to retest the highs it set earlier this month, it hasn’t dropped that much either, in a way it seems as if it is taking a breather. Considering, the update from the Fed a few weeks ago, it is possible that rates will be lifted in the first half of 2022, so that will be on traders’ minds as we go into the new year.

Gold is holding up alright considering the firmer US dollar and the bullish mood in equities. Since the Fed’s meeting in the middle of the month, the yellow metal has been largely pushing higher. While the US dollar remains below its recent peak, it is possible that gold might retest the $1,820 mark. Industrial commodities like, oil, copper, platinum, and palladium are up on the session due to the broad risk-on attitude in the markets.

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