This website uses cookies. We use cookies to ensure that we give you the best experience on our website. Read More

Daily Wrap Up 7 December 2021

7 Dec 2021 04:18 PM

Stocks surge as omicron fears diminish

Traders continue to be bullish as the fear surrounding the omicron variant of the coronavirus continue to fall, and that has pushed up equity markets. The FTSE 100 has enjoyed the best recovery from the recent declines, as it hit its highest mark in three weeks, while the DAX, the Dow Jones, and the S&P 500 are only retesting their late November peaks. BP and Royal Dutch Shell are relatively large constituents in the FTSE 100, and their robust performances recently has given the British index an edge over other markets. It has been almost one week since equity markets in Europe and the US plunged to their recent lows, and since then the worries about the omicron strain has dipped. Winter in the norther hemisphere always posed a risk with respect to the virus, but so far there hasn’t been any major issues regarding economic disruption.

The Australian dollar is higher across the board today as the Reserve Bank of Australia (RBA) hinted that it might look to taper its asset purchase scheme in February. Overnight, the RBA left rates on hold at 0.1% and the stimulus scheme was kept on hold too at AUD$ 4 billion per week – meeting forecasts, but the central bank announced that it might reassess its bond buying programme in February, and traders took that as a sign it might begin tapering, hence why the Aussie is higher. The currency was already rallying ahead of the RBA meeting as yesterday the Chinese central bank cut the reserve requirement ratio in a bid to stimulate the economy. Australia is heavily dependent on the Chinese market in terms of exports so the improved prospects for China assisted the Australian dollar too.

It has broadly been a quiet session on the currency market. The US dollar continues to grind higher as the US 10-year yield reached 1.45%, the highest level since last Friday. In late November, the US dollar index registered a new 16 month high and if this latest bullish trend continues, it could retest that level. The euro is lower across the board despite the European Central Bank (ECB) announcing that rate hikes could happen while the bond buying scheme is still ongoing. Next week, the Bank of England (BoE) and the ECB will hold their interest rate decisions. Due to fresh fears about the coronavirus, there is growing chatter the BoE might not hike rates next week.

Commodities are in high demand today as the overall risk-on sentiment is boosting oil as well as industrial metals such as silver, platinum, and copper. Gold is up today too, and it is remarkable the yellow metal is rising in the face of a firmer US dollar as well as bullish stock markets.

Prices may be delayed by 5 seconds. Prices above are subject to our website terms and conditions. Prices are indicative only