It continues to be a volatile time for markets as the world continues to face Omicron without knowing much about the transmission rate or the severity of this new variant. Inflation is also dominating investor sentiment, particularly as Omicron could bring further supply chain disruptions across the world.
US: Volatile week for stock markets
Stocks experience volatility this week, drive by two key elements. Firstly, the Federal Reserve restated that it expects inflation to subside next year, but that it had become elevated enough for them to potentially take action. Secondly, there continue to be fears that the emergence of omicron could weigh on global economic growth and contribute to supply chain disruptions.
Japan: Major policy reversal weighs on markets
In a major reversal of policy, Japan closed its borders to foreign nationals – except for those with special permission to enter – citing the emergence of omicron, which weighed on markets. The government sought to continue their strong vaccine rollout as the begin to administer booster shots. On the economic front, industrial production and retail sales rose in October and unemployment edged lower, likely reflecting a recovery in demand following the ease of coronavirus restrictions.
China: Factory activity rises but property sector remains in the limelight
China’s factory activity rose in November for the first time in three months as surging raw material prices and power rationing eased. On the property front, Kaisa Group did not received approval from its bondholders to extend some debt, making it the latest Chinese property developer to edge closer to default. It is becoming increasingly likely that the Chinese government may have to step in if the issues in the property sector spread to the domestic economy.
Europe: Inflation and Omicron concerns impacts markets
Shares in Europe posted mixed results after a volatile week. Cases of omicron were detected across Europe, prompting many countries to tighter restrictions. On the economic front, inflation in the eurozone accelerated to its highest level since the single currency was introduced in 1999. Annual consumer prices rose to 4.9% in November as energy costs surged. The European Central Bank continued its narrative that inflation is not spiralling out of control.
UK: All eyes on Omicron
Cases of omicron are rising in the UK. GPs were told to temporarily scrap services in a bid to speed up the booster jab rollout. The Omicron variant could mean inflation remains high for longer than expected if it prevents consumers switching their spending from goods to services and prolongs disruption to global supply chains. There is still debate as to whether the Bank of England will raise interest rates this month or if it will delay any hikes due to Omicron.
The Omnis Managed funds, Openwork Graphene Model Portfolios and Omnis Managed Portfolio Service provide you with a diversified asset allocation in line with your Attitude to Risk, investing in Developed Market Equities, such as UK, US, Europe and Asia Pacific as well as Emerging Market equities. Cautious and Balanced investors will also have significant holdings in UK and Global Bonds, as well as Alternative Strategies. We believe this multi-asset approach aims to minimise global equity market falls in volatile periods. Past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you originally invested.
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