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Daily Wrap Up 8 December 2021

8 Dec 2021 04:30 PM

Stocks slide as bulls retreat

Eurozone and US stock markets are showing modest losses following two very bullish sessions. The FTSE 100 is narrowly higher even though there is increasing chatter the UK government will announce tighter restrictions for England in next day or two. The weakness in the British pound is keeping the FTSE 100 in positive territory. Fears of restrictions being introduced are weighing on hospitality stocks such as JD Wetherspoon, the Restaurant Group and Mitchells & Butlers. In a similar fashion, Cineworld is also suffering. By contrast, ASOS and Ocado are a touch higher this afternoon as online shopping might become more popular as restrictions might deter shoppers from going to their local high streets.

The Bank of Canada (BoC) kept interest rates on hold at 0.25%, meeting expectations. In addition to that, the central bank maintained its forward guidance with respect to interest rate projections. As a result of the news, USD/CAD jumped, but keep in mind the currency pair fell to its lowest mark in almost three weeks in advance of the BoC announcement. Canada’s economy is enjoying a healthy rebound, as last week it was confirmed the jobless rate dropped to 6%, the lowest since the pandemic began.

The US JOLTS report showed that a record 11.03 million job openings were registered in October. This is further proof the US is recovering from the pandemic. Last Friday, it was confirmed the unemployment rate in November fell to 4.2%, its lowest level in 21 months. Today’s job opening numbers tells us that employers are confident to take on extra workers, but they might have to offer more attractive packages to secure new staff. Average earnings are rising but they might need to grow at as faster rate, as it seems that companies are finding it difficult to fill vacancies. The US dollar index is down over 0.25% today, but keep in mind that it rallied for six consecutive weeks prior to this week. Also, next week the Federal Reserve will reveal their policy, and there is speculation the central bank might look to speed up the tapering scheme.

Even though the US dollar and equity markets are lower, gold is in the red. Typically, the metal rallies in such circumstances, but it speaks to an absence of demand that it can’t gain ground today.

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