Market Update

The week began on a subdued note but gained momentum on Tuesday as global equity markets surged. Preliminary findings suggested that, while the Omicron variant is more transmissible, its effects might be milder and that it doesn't heavily strain hospitals. Additionally, several vaccines and treatments seem promising against this variant.
However, it's prudent to remain vigilant regarding the broader implications of Omicron. It's undeniable that this is a health crisis, necessitating governments to take further actions to curb the spread. These measures will undeniably impact businesses in diverse ways. In the UK, the newly announced "Plan B" could dampen the prospects of the travel and leisure industries during the crucial Christmas season. Conversely, some firms might see a surge in demand as consumer patterns evolve in response.
While this week witnessed an uptick in market sentiment, it's expected that market volatility will persist in the short term, especially as we gain more insights into the Omicron variant and markets react to unfolding events. Long-term investors are advised to stay steady and remember that enduring market presence often proves more rewarding than attempting to predict its ebbs and flows. A year ago, the first Covid vaccine was rolled out in a mass vaccination drive. Despite the virus's persistent influence, many stock markets have seen remarkable returns since.
On another positive note, commitments in China's monetary policy have also contributed to investor confidence this week. Amidst its endeavors to realize 'common prosperity,' China has signaled a balanced perspective on its immediate and extended economic objectives during its Central Economic Work Conference. This alleviated concerns, particularly with the forthcoming 20th National Party Congress on the horizon.
UK's economic figures for October weren't particularly impressive, with monthly GDP at +0.1% and manufacturing remaining static. However, there are glimmers of hope, as November's UK construction PMI survey surpassed expectations, hinting at the possibility of mitigating pressures like energy costs and supply chain disruptions.
The US, on the other hand, recorded its highest annual CPI inflation at 6.8% since 1982. This aligns with predictions that the US Fed might hasten its tapering efforts. Yet, if supply chain issues start resolving, this inflationary peak might be short-lived. Supporting this view, US President Joe Biden expressed his belief in a faster-than-expected reduction in inflation rates.
Next week promises to be eventful, with major central banks, including the US, European Central Bank, Bank of Japan, and Bank of England, all reviewing monetary policies. Given recent events, all predictions seem uncertain. Key data points to watch out for include US PPI, housing starts, jobless claims, and industrial output; UK's unemployment and inflation statistics; and China's retail sales, industrial figures, and property prices.