Concerns increase, Stocks fall
At the beginning of the European season, stocks started to fall and continued the Asian market sentiment. Earlier, the Asian season while was started with a little bit positive sentiment about playing down the risk by many investors, at the end, closed with a red color.
Yesterday Mr. Biden denied the possibility of new lockdowns and quarantine, which caused a positive outlook in the market. He said that the government is actively formulating emergency plans with vaccine manufacturers and is expected to produce booster injections against new strains in a short period. On the other hand, Fed Chairman Powell repeated his concerns about the counterattack of the epidemic. He believes that the recent increase in new infections and the Omicron variant can be a serious threat to the employment market, as well as economic activities. Today and tomorrow, Mr. Powell will attend the testimony with Treasury Secretary Yellen, to explain the FED economic outlook and the effectiveness of the FED stimulus. Meeting also will have a Q&A season, which is expected to create a volatile market.
However, the short-lived optimism that has been created by South African health experts indicating that the symptoms have been mild so far, is gone now. Dax, Footsie, and FR40, all are down more than 1.2% on average. In the US Futures markets also we can see more than 1% loss on average. Short-lived optimism ended with Moderna chief Stephane Bancel`s comment in a Financial Times article, meaning that the existing vaccines would struggle to cope with the omicron variant, predicting a ‘material drop’ in their effectiveness.
The omicron variant has now been seen in more than ten countries, including Canada, the country which has an alongside the border with the US. So far, the "World Health Organization said on Monday that the modification posed a very high risk of infection surges, although the UN body added it is still unclear how severe the new variant is."
On the data front, yesterday the US pending home sales increased by 7.5% in October, while German CPI in November inched higher with 5.2%.
Today in the Asian season, the Chinese manufacturing purchasing managers index was seen at 50.1 in November, above the 49.2 of October, and the non-manufacturing PMI was at 52.3, less than a52.4 seen in October. Also, Australian Building Approvals fall by 12.9% in October. In Japan, the unemployment level eased to 2.7%.
European season also started with employment data from Germany. Germany`s unemployment rate eased to 5.3% in November from 5.4% in October. And now eyes turn to Eurozone inflation numbers.
With the current data and market situation, and while we have many data to watch, however, it is the Coronavirus update and Mr. Powell`s testimony that will lead the market. Today`s outlook is negative for stock markets (Based on what has been explained above) and positive for the US dollar and Safe-havens.
