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Omicron, Inflation, Mixed U.S. Jobs Report Cast Shadow over Markets

Omicron, the latest COVID-19 variant, has hit financial markets and has compromised economic recovery around the globe as countries were exiting the Delta triggered lockdowns. The week also starts at the wake of a mixed U.S. jobs report. Bitcoin, other cryptos and most Japan stocks are down while gold and oil are up.

Omicron Disruptions

Due to concerns linked to the new COVID-19 variant, the International Monetary Fund announced that it is likely to decrease its global economic growth estimates while Goldman Sachs have already lowered their forecasts for the U.S. economy this year.

The variant is swiftly jumping from country to country while according to recent data it appears to be highly contagious. With the severity of the disease and the level of protection of current vaccines still unknown, there is no health experts’ official statement, and it could take weeks until answers are available.

Bitcoin and Assorted Cryptos

Bitcoin was shaken by the Omicron variant and the hawkish attitude of the Federal Reserve. The digital currency plummeted by more than 20% since the start of last month. The crypto asset fell from a high of over $67,000 and is trading below $50,000 at the time of writing. Ethereum, the second largest cryptocurrency after Bitcoin, fell more than 10% before pulling back.

Additionally, a possible regulatory crackdown could be concerning to crypto investors. On Wednesday, cryptocurrency firm executives – Coinbase executives among them – are going to testify before the U.S. House Financial Services Committee in the midst of calls for regulations for the crypto market.

Jobs in the U.S.

The U.S. jobs report revealed mixed results on its Friday release. Non-farm payrolls for November came out at 210,000 hitting a lower level than the 550,000 forecasts. At the same time, the unemployment rate fell to 4,2% hitting a 21-month low.

Despite the boosted businesses hiring, prices remain high, and supply constrains don’t seem to be substantially retreating. The Fed could decide to taper its asset buying during this month’s meeting in response to a tightening labor market. This could lead to interest rate hikes sooner than expected.

Inflation

The November U.S. consumer price inflation data is slated to be released on Friday, December 10. October’s U.S. CPI went up 6.2% recording the fastest annual increase in longer than three decades. Forecasts for November rose to 6.7%. Another high reading could reinforce expectations that the Fed could start tapering sooner.

Oil

Oil prices increased by more than $1 per barrel today, Monday. The price rise came after Saudi Arabia increased the prices for its crude oil sold in Asia and the U.S. and after the indirect talks between the US and Iran on reviving a nuclear deal came to a dead end.

Gold

Gold was up in Asia at the time of writing. The rise could be attributed to the mixed U.S. jobs report and investors contemplating the impact the report could have on the U.S. Fed’s next decision.

Stock Markets

Japan stocks went lower while the Nikkei 225 fell 0.36% at the Tokyo close. At the Tokyo Stock Exchange, 2136 stocks fell, 1428 went up and 222 didn’t record changes.

What to Watch out for this Week

Tuesday
Reserve Bank of Australia policy decision
Eurozone GDP

Wednesday
Reserve Bank of India Rate Decision
Olaf Scholz to replace Angela Merkel as Chancellor of Germany
European Central Bank President, Christine Lagarde gives speech

Thursday
Reserve Bank of Australia Governor Phillip Lower gives speech
China CPI
China PPI

Friday
U.S. CPI