The ADP employment report showed that the US labor market is recovering despite high inflation. But 5 million more new jobs are needed to reach pre-pandemic levels. The ISM manufacturing activity index also showed improvement. The US stock market ended trading higher. By the close of the stock market, the Dow Jones index (US30) increased by 1.82%, S&P 500 (US500) added 1.42%, NASDAQ Composite (US100) jumped by 0.83%. The US will release an important nonfarm payrolls report today. Analysts are confident that whatever data is released today, the decision to reduce stimulus more quickly will be made at the next meeting since high inflation leaves the Fed with no other choice.
According to 79 of 106 analysts surveyed, a global market correction is likely in the next six months. Saxo Bank predicts a constitutional crisis in the US and inflation above 15% next year.
Omicron continues to spread worldwide, with new infections found in countries, including the United States, Norway, Ireland, Australia, and South Korea. At the same time, South Korea is introducing lockdowns for the unvaccinated. Australia’s chief medical director said there is no indication that Omicron is more deadly than other Covid strains because all cases reported so far have been very “soft” or no symptoms at all. Meanwhile, a scientist from South Africa’s National Institute of Infectious Diseases said that there has been an increase in the number of repeated diseases Omicron, which has not been seen in previous strains.
Meanwhile, US President Joe Biden announced a new plan to confront the coronavirus on Tuesday. The new measures include an expanded campaign to re-vaccinate those who need it.
Yesterday, European stock indexes closed in the red zone. There is no single correlation between the indices of Europe and the United States now, which happens quite rarely. German DAX (DE40) decreased by 1.35%, French CAC 40 (FR40) decreased by 1.25%, British FTSE 100 (UK100) lost 0.55%, Spanish IBEX (ES35) decreased by 1.8%. The unemployment rate in the EU fell from 7.4% to 7.3%. The ECB representative said yesterday that inflation in the region is temporary. The same thing was being said for a year by Jerome Powell, a head of the US Federal Reserve, but he has recently changed his rhetoric and stopped using the word “temporary” for inflation. Analysts are confident that the growth of inflation in the EU will continue until the summer-fall of 2022.
Moderna announced an agreement with the United Kingdom to deliver additional 60 million doses of Covid-19 vaccines in 2022 and 2023. It looks like the virus epidemic won’t end anytime soon. The EC Public Health Agency has warned that the Omicron variant could cause more than half of all Covid-19 infections in Europe within the next few months.
Omicron has not yet been taken into account by the OPEC+ committee meeting. Following the OPEC+ meeting yesterday, the world’s largest oil producers left production quotas for January at 400,000 bpd. Analysts expect oil prices to return above $75 a barrel.
Following a rally on Wall Street, Asia-Pacific stock markets are increasing today, except for the Hong Kong index. Hong Kong’s Hang Seng (HK50) decreased by 0.42%, Japan’s Nikkei (JP225) added 1%, and Australia’s S&P/ASX 200 (AU200) increased by 0.22%. Shares of the Hong Kong Internet giant Alibaba (-3.8%) and car maker BYD (-3.7%) were among the fall leaders on Friday.
Main market quotes:
- S&P 500 (F) (US500) 4,577.10 +64.06 (+1.42%)
- Dow Jones (US30) 34,639.79 +617.75 (+1.82%)
- DAX (DE40) 15,263.11 −209.56 (−1.35%)
- FTSE 100 (UK100) 7,129.21 −39.47 (−0.55%)
- USD Index 96.14 +0.11 (+0.12%)
Important events for today:
- Japan Services PMI (m/m) at 02:30 (GMT+2);
- ECB President Lagarde’s Speech at 10:30 (GMT+2);
- Eurozone Services PMI (m/m) at 11:00 (GMT+2);
- UK Services PMI (m/m) at 11:30 (GMT+2);
- Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
- US Nonfarm Payrolls (m/m) at 15:30 (GMT+2);
- US Unemployment Rate (m/m) at 15:30 (GMT+2);
- Canada Unemployment Rate (m/m) at 15:30 (GMT+2);
- US ISM Services PMI (m/m) at 17:00 (GMT+2).