You're now leaving O-IM

O-IM’s website and/or mobile terms, privacy and security policies don’t apply to the site or app you're about to visit. Please review its terms, privacy and security policies to see how they apply to you. O-IM isn’t responsible for (and doesn’t provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the O-IM name.

Cancel Proceed

Coming soon ...

Close

Weekly Market Wrap 14/01/2022

UK GDP has finally recovered to its pre-pandemic level after than larger expected growth in November. US Federal Reserve officials displayed further hawkish sentiment after CPI data showed US inflation rising by 7% in December 2021, the largest year-on-year increase seen since 1982. Recent jobs data showed that the US unemployment rate was at 3.9%, only just above pre-pandemic levels, indicating that the US may be close to full employment. China posted a record trade surplus of $676 billion in 2021, up from $524 billion in 2020. China’s exports had a bumper year, increasing by 30% to reach $3.4 trillion of exports in 2021.

US Market 

The S&P 500 is down 0.38% to 4,659.03, with significant sector rotation in the market caused by a renewed focus on combatting inflation despite potential concerns on economic recovery. The tech-focused Nasdaq has suffered its worst week since early 2020. The market appears to expect that the Omicron variant will not cause major problems for mid to long term growth given the lower level of hospitalisation. However, the market may be failing to reflect the possible impact of workforce absences due to isolation in the short term.

UK Market 

The FTSE 100 ended the week up 0.99% at 7,559, gaining for the fourth consecutive week. Financials have continued to perform strongly relative to other sectors of the index, pushed higher by the increasing expectations that the Bank of England will increase interest rates once again in the near future. Data released on Friday showed that the UK economy grew strongly in November 2021, growing to a larger level than was seen pre-pandemic. However, UK GDP was likely affected by the news of the Omicron variant and increased public guidance issued in December 2021.

European Markets                                                                    

The Euro Stoxx 50 lost 0.82% this week, falling to 4,271. Losses were seen across Europe on Friday after expectations that a Federal Reserve interest rate hike was coming in the near future increased after US CPI data was released earlier this week. The selloff in some growth stocks also continued in Europe. The CAC 40 also fell this week, down 1.18% whilst the DAX lost 0.50%. Germany reported disappointing GDP data, falling as much as 1% in the final months of 2021.

Fixed Income

The US 10-Year Treasury yield fell 0.017 percentage points to 1.75%, as investors digest slightly higher jobless claims numbers in the US and expectations of inflations subsiding, despite the increased taper timeline.

 Commodities

WTI Crude rose 5.12% to 82.94, as the market overlooks Omicron fears overshadowed by the worry that the spare capacity of some of the OPEC+ producers is in question. There is a net drawdown in crude inventories, as the Keystone pipeline was offline for a couple of weeks, offset by a build in finished products.

Gold rose 1.39% to 1,822.4, as the price of the precious metals remains in a consolidated range after a number of false breakouts.

The Week Ahead  

Monday – China GDP; China Retail Sales

Tuesday – BoJ Rate Decision; UK Claimant Count

Wednesday – UK CPI; Germany CPI; Canada CPI

Thursday – Australia Unemployment; China Rate Decision; BoJ Meeting Minutes

Friday – UK Retail Sales; Canada Retail Sales; EU Consumer Confidence

*Price changes as of last week’s close unless stated otherwise.