Bulls and bears jostle as Omicron and Fed push investors

  • Asian markets retreated to the main US NFP.
  • Mixed Fedspeak, Omicron in the USA weigh on the risks but China and the WHO favor bulls.
  • OECD lowers global growth forecast, VIX hits annual high.
  • Australian trade housing data has been mixed but lower yields favor poles and commodities.

Asian stocks traded in a mixed fashion, with fears about the virus joining the Fed’s measured response to inflation and the gossip surrounding China. That said, the MSCI Asia-Pacific Stock Index outside of Japan maintains rebound year low, up 0.30% during the day, while Japan’s Nikkei 225 posts daily loss. 0.35% before the European session on Thursday.

Fed Chairman Jerome Powell’s step back from previously hawkish testimony while estimating, according to Reuters, that inflation will drop “significantly” in the second half of 2022, during testimony against a senatorial commission. On the contrary, Federal Reserve Bank of New York chairman John C. Williams said, according to The New York Times, that Omicron could prolong the mismatch of supply and demand, causing the persistence of certain inflationary pressures. In addition, Cleveland Fed Chairman Loretta Mester hints at an acceleration in the rate and rate likely next year, according to Bloomberg.

Additionally, the first Omicron case in the United States prompted President Joe Biden’s administration to extend mask-wearing rules on public transportation. The latest economic forecast from the Organization for Economic Co-operation and Development (OECD) could add to risk aversion, suggesting global GDP growth of 5.6% (previously 5.7%) in 2021, 4 , 5% in 2022, 3.2% in 2023, by Reuters.

On the contrary, the Reuters article citing more bond issuances by Chinese developers shows that Beijing is easing liquidity strains slightly on the cash-strapped sector, which in turn has favored stocks in China, albeit marginally. . The same, however, cannot help stocks in Australia and New Zealand (NZ), as Canberra’s mixed trade and housing data have joined the New Zealand Terms of Trade Index more closes for the third quarter. Alternatively, traders from Indonesia, India, and South Korea manage to keep up with China-related gains.

It should be noted that 10-year US Treasury yields are healing their wounds at the lowest levels since early October, around 1.42% after refreshing the multi-day low to 1.40% the previous day. Alternatively, the S&P 500 Futures impression increases 0.35% to 4,523.

Importantly, DBC’s volatility index (VIX) remains firmer around the annual high, around 7.13 at the latest, while Goldman Sachs cites an industry risk appetite measure to show the strongest risk aversion conditions in the market in 2021. “Net leverage, a measure of industry risk appetite that takes into account long versus short positions, has fallen. at its lowest level in a year this week, according to data compiled by lead broker Goldman Sachs Group Inc., ”Bloomberg said.

Continuing, investors are likely witnessing a lackluster day amid a lack of major data / events ahead of Friday’s US jobs report. However, virus updates and second level data from the United States can keep traders entertained.

Read: Yields remain under pressure at 10 week low, S&P 500 Futures shows slight gains amid sluggish markets

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