Market Update

This week witnessed quite a roller-coaster ride in the financial landscape, largely influenced by fluctuating news about the coronavirus, causing global equity markets to sway.
Intriguingly, our analysis suggests that most outcomes relating to the Omicron variant could potentially favor a rise in global equity markets. For instance, if Omicron is found to have less severe symptoms and current vaccines prove effective against it, it bodes well for a sustained global recovery and thus, a positive outlook for equity markets. Conversely, if the variant proves more harmful, requiring new vaccination strategies, the likely economic downturn and disinflation could be counterbalanced by fiscal and monetary stimuli, again favoring the equity market.
Yet, the trajectory for global equities is hardly ever straightforward or predictable. Given the inherent aversion of equity markets to uncertainty, and the current limited knowledge about this new variant, it's predictable that markets will be highly reactive to each new piece of information that emerges.
In the upcoming weeks, as we gain more insights into Omicron, we can expect a somewhat zigzag pattern in the markets with periods of advancement followed by brief retractions, indicating heightened volatility.
With the re-emergence of various restrictions to counter the spread, there's bound to be an economic repercussion. However, the degree of this impact remains uncertain, as does the potential need for central banks or governments to step in with assistance.
We recognize that such turbulent times can be disconcerting. Yet, for long-term investors, there's little to fret about. We remain optimistic about the upward trajectory for global equity markets. Please know that our teams are at your service, ready to assist with any portfolio-related queries or concerns. Moreover, our Investment Advisers are equipped to offer you regulated advice whenever needed.
As we gaze into the next week, while the coronavirus will likely remain a significant influence, we'll also be keenly observing economic indicators like the UK's October GDP, UK industrial output, CPI metrics from the US & China, the University of Michigan's consumer sentiment index, and trade balances from both the US & China.