Immediate Market Reaction to Omicron Trimmed Back but Only Partially
November 29, 2021
It will take a week or two before a clearer picture emerges of the Omicron Variant and investors have a better understanding of key questions such as the protection existing vaccines provide to the new mutation. Markets had reacted very adversely on Friday to first learning about Omicron. Today has seen a partial reversal of Friday’s changes.
- Ten-year sovereign debt yields have risen 8 basis points in the United States, 5 bps in the U.K., 4 bps in Germany, and three basis points in France, Italy, Spain, and the Netherlands.
- Share prices fell in the Pacific Rim by 1.4% in Singapore, 1.6% in Japan, 1.0% in Hong Kong, 0.9% in South Korea, and 0.5% in Australia but turned upward in European trading with gains so far of 1.7% in Italy and Spain, 1.5% in France, and 0.9% in Germany. In the U.S. the Dow and S&P show advances of less than 1.0%.
- The price of WTI oil, which had plunged Friday, rebounded 6.3% today amid speculation that planned OPEC production increases will be stopped.
- Gold has barely moved on net.
- The DXY weighted dollar index climbed back 0.3% so far today, and the U.S. currency advanced sharply against the beleaguered Turkish lira.
Several countries reported price data this Monday.
German consumer price inflation accelerated 0.7 percentage points further in November to 5.2%, highest since mid-1992. On-year rises in the energy, food and services components of 22.1%, 4.5% and 2.8% were each greater than in October.
Spanish CPI inflation moved up another 0.2 percentage points to a 350-month high of 5.6%.
Producer price inflation in Singapore of 25.4% in October was the most in 499 months (i.e. since March 1980) and 30 percentage points above the 4.6% 12-month rate of decline clocked in January 2021.
Canadian producer price inflation accelerated 1.4 percentage points to a four-month high of 16.7% in October.
Belgian CPI inflation of 5.6% in November constitutes a 159-month high and was four percentage points greater than the on-year pace in June.
Italian PPI inflation of 20.4% last month compared to 13.3% in September and was the most since at least the mid-1980s.
Many measures of business and consumer sentiment were also released today.
Economic sentiment in the euro area fell 1.1 index points to a six-month low in November and embodied a 7-month low in consumer confidence and a 2-month low in industrial sector sentiment.
Dutch business confidence improved this month to its best level since at least the mid-1980s, but the data do not embody the Omicron finding.
Portuguese business sentiment ticked down 0.1 point below October’s 233-month high, and consumer confidence in Portugal fell 8.2 points to an 8-month low.
Greek business and consumer confidence in November climbed to 21- and 2-month highs, respectively.
Finnish business confidence this month reached a 17-year high, but consumer confidence in Finland slid to a 3-month low.
Spanish business sentiment in November remained at October’s 233-month peak.
Danish business confidence eased to a 2-month low in November.
Turkish economic sentiment dropped 2.1 index points to a 5-month low in November, and Taiwanese consumer sentiment likewise weakened to its weakest level in five months.
In Japan, retail sales rose for a second straight month and posted a greater-than-expected 12-month increase of 0.9% in October.
In Canada, where current account deficits were experienced every quarter from 4Q 2008 through 4Q 2020, a third straight quarterly surplus was reported today, bringing the January-September surplus to C$ 4.377 billion. That’s still tiny compared to the C$ 39.4 billion deficit accrued in full-2020.
Swedish GDP growth last quarter has been revised upward slightly to 2.0% and was associated with a 4.7% on-year advance. Between 2Q 2020 and 2Q 2021, GDP had increased by 10.0%.
U.S. pending home sales jumped 7.5% in October, roughly eight times more rapidly than forecast, and the resulting 1.4% decline versus October 2020 was the smallest in a string of five consecutive year-on-year declines.
The Dallas Fed manufacturing index slipped back to 11.8 in November from a reading of 14.6 in October and a 2021 high of 37.3 in April.
Late last week, central bank rates of 1.0% and 5.0% in South Korea and Sri Lanka were reviewed and left at those levels.
Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Canadian current account, Euroland economic sentiment, Japanese retail sales, U.S. pending home sales
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