Index
For the week, the Dow Jones fell 0.29%, the S&P 500 fell 1.87%, and the Nasdaq fell 4.53%. Both the S&P 500 and the Nasdaq fell for four straight sessions. Analysts said the U.S. nonfarm payrolls report in December made the Fed's case for raising interest rates or even shrinking its balance sheet even more compelling this year. A Fed official expressed support for gradual rate hikes this year and hoped the central bank would start shrinking its balance sheet sooner.
The U.S Labor Department reported on Friday that nonfarm payrolls rose by 199,000 in December, less than half the forecast and the smallest gain since January last year. The nonfarm payrolls report also showed that the unemployment rate fell to 3.9% in December, and average hourly earnings rose 0.6% month-on-month and 4.7% year-on-year. After the report was released, the yield on the 10-year U.S Treasury note stood at 1.762%, staying close to the highest level since late March last year. The analysis said that overall, the US employment data is close to the Fed's full employment target, but inflation is still high. In order to curb inflation, the Fed will inevitably move towards raising interest rates or even shrinking its balance sheet this.
Stocks
Electric vehicle maker Lucid (LCID) has confirmed its entry into the European market this year. A few days ago, Lucid responded to a user on Twitter asking if it would offer products in the UK: Lucid will start expanding into the European market this year.
The U.S Food and Drug Administration FDA has shortened the interval between booster doses of the Moderna (MRNA) vaccine to 5 months. The shortening of the waiting time for the booster shot is to strengthen the protection of people during the deterioration of the epidemic caused by the mutated strain of the new coronavirus Omicron.
Tesla (TSLA) raised U.S Model X Plaid prices and they will deliver 15 Semi electric semis to PepsiCo (PEP.US) this month. PepsiCo issued a startling press release in March 2021, saying they would take delivery of 15 Tesla Semi electric semis by the end of 21. However due to tight supply production of the Semi will be delayed until 2023 . PepsiCo has been told it expects to receive all 15 Tesla Semis by the end of January this year.
Blockchain concept stocks such as Marathon Digita (MARA), Coinbase (COIN), Riot Blockchain (RIOT), and MicroStrategy (MSTR) generally fell due to Bitcoin falling below the 42,000 mark.
Crypto
In 2021, the cryptocurrency industry is thriving. Although Bitcoin fell into a bear market in December last year and this week, it still recorded an increase of more than 60% throughout the year, beating the S&P 500 index in the United States during the same period. Regarding the prospects of Bitcoin in 2022, some analysts believe that the cryptocurrency is likely to reach $100,000 by the middle of the year. There are two main reasons for Bitcoin to rise. On the one hand, institutions are building bitcoin positions, and companies such as MicroStrategy and Square have already bought a lot of bitcoin. Bridgewater founder Dalio also said in an interview with the media that it is reasonable to allocate 1% to 2% of the funds in the portfolio to Bitcoin. Previously, he admitted to owning a little bit of Bitcoin. On the other hand, a lot of liquidity has continued to exist this year, even though the Fed is likely to raise interest rates this year.
However, there are also some who are bearish on Bitcoin. Carol Alexander, a professor of finance at Sussex University, believes that Bitcoin will fall to $10,000 in 2022, erasing all of its gains over the past year and a half.
Metals
Spot gold fell 1.78% this week, ending the previous three-game winning streak, as the Federal Reserve may raise interest rates ahead of schedule, but the panic of the U.S pandemic get worst caused gold prices to rise on Tuesday. In addition, the dollar index fell as much as 0.56% and the US government report on Friday showed nonfarm payrolls increased by 199,000 last month, fell well short of economists' expectations. Disappointing jobs data boosted safe-haven demand for gold and gained some support. However, the expectation of the Fed raising interest rates in March has become the consensus of investment banks, and even the time to shrink the balance sheet has been put on the agenda, and the gold price outlook is expected to be more passive.
Meanwhile, rising wages and falling unemployment have fueled inflation fears, bolstering bets that the Federal Reserve could raise interest rates as early as March, which pared gains for gold, which does not offer interest.
Bart Melek, global head of commodity strategy at TD Securities, said hawkish views on the Fed could weaken if jobs and other data continue to be weak in 2022 if the timing of a sharp exit from monetary easing is delayed, the price of gold may see a short-covering-driven rise.
Commodity & Futures
U.S. crude oil rose 4.63% this week, achieving a three-week winning streak. On the one hand, the continuous social unrest in Kazakhstan and the reduction of oil production in Libya have caused the market to worry about tight supply. However, Omicron's negative impact on the oil market is still not to be underestimated because of factors such as the disappointing non-agricultural data in December, the Fed's expected rate hike in March, and the widespread cancellation of flights across the United States.
Chevron, the operator of Tengiz, Kazakhstan's largest oil field, said it cut output on Thursday as some contractors supported protests by disrupting railway lines. Libyan output had fallen to 729,000 bpd from a high of 1.3 million bpd last year barrels/day, in part due to pipeline maintenance.
Ed Moya, senior market analyst for the Americas at Oanda, said the oil market remains very tight and looks set to continue higher, but energy traders are concerned that coronavirus restrictions in Europe and Asia could threaten the short-term demand outlook.
This week, the OPEC+ alliance announced might stick to a plan to increase production by 400,000 barrels a day in February. However, the group is unlikely to meet the planned increase, as some member countries struggled to meet output targets in previous months.
Forex
The dollar index fell on Friday after U.S. nonfarm payrolls data showed that wages rose faster than expected in December and the unemployment rate fell, supporting speculation that the Federal Reserve will start raising interest rates in March. U.S. 5-year Treasury yields hit their highest levels since January 2020.
The report also boosted expectations that the Fed will start raising rates at its March meeting, with federal funds futures showing a 90% chance of a rate hike in March, up from 80% on Wednesday. Benchmark 10-year rates U.S. Treasury yields hit 1.80%, their highest level since January 2020.
HSBC's Daragh Maher said in a note that today's data was strong enough not to delay the Fed's easing exit, which we expect will drive the dollar further up in the coming months.
The euro rose 0.57% to 1.1361 on Friday, as it strengthened against the dollar after the jobs report, after little market reaction to data that eurozone inflation rose to 5% in December. Eurozone policymakers have said they expect inflation to moderate gradually in 2022 and may not need to raise interest rates this year.
OneProSpecial Analyst
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