Weekly round up
Volatility returned this week with the FTSE 100 initially falling towards the psychological 7,000-point level on Tuesday. However, the index managed to end the week in the green increasing by 0.07% to trade at 7,130 points at the time of writing.
Investors weighed concerns over the new Omicron coronavirus variant, against rising price pressures and prospects of early tapering by the US Federal Reserve.
UK services activity growth remained solid in November with the latest HIS Markit/CIPS Purchasing Managers’ indices pointing to strong output growth, although some firms noted that shortages of staff and supply chain issues had acted as a constraint on expansion. New business increased to its highest since June, supported by a solid rise in consumer and business spending, while export sales also saw growth, the most in over four and a half years. Employment numbers increased for the ninth consecutive month but at the slowest rate since July, due to difficulties finding candidates to fill vacancies.
In the commodity markets, Brent crude futures rebounded towards $72 a barrel on Friday after OPEC+ kept the door open for policy changes, pledging to act swiftly if demand suffered from measures to contain the Omicron variant. Benchmark London oil prices dipped below $66 in the previous session as OPEC+ surprised markets when it stuck to plans to add 400,000 bpd supply in January, seen by analysts as a move meant to appease Washington.
Gold remained weak below $1,780 an ounce on Friday, hovering close to one-month lows and on track for its third weekly decline. The yellow metal suffered after Federal Reserve Chair, Jerome Powell doubled down on his hawkish tilt, stating in congress on Wednesday that policymakers will discuss an earlier end to the central bank’s stimulus in the next meeting.
US stock futures were trading slightly lower on Friday as markets remained driven by Omicron variant related news and its economic impact, as well as by expectations of faster tapering and earlier rate hikes.
In Thursday’s trading session, US stocks staged a broad recovery rally led by the energy, industrials, real estate and financial sectors with investors taking advantage of the dip to buy cyclical names tied to the economic recovery.
Boeing shares rose more than 7% after China’s aviation authority finally cleared the path for a return to service of the troubled 737 MAX aircraft. Meanwhile tech stocks underperformed, Apple shares were under pressure as the company warned suppliers that it may not materialise all of its orders because demand for the new iPhone 13 has weakened.
On the economic data front, initial jobless claims came lower than expected at 222,000 last week, while investors await November’s jobs report due on Friday.
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