Weekly Recap 20 – 24 Dec.

The financial markets closed the trading week ending on December 24, with the progress of risk assets, led by global stocks, over the rest of the safe-haven assets, led by the US dollar.

Over that week, the main drivers of the markets were the economic data and positive developments regarding the Coronavirus in general and the mutated Omicron of the epidemic in particular.

Calendar

Inflation in the US, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 4.7% YoY in November, the US Bureau of Economic Analysis reported on Thursday. That was above the consensus forecast for an inflation rate of 4.5% and marked a substantial acceleration from October’s inflation rate of 4.2%, which was upwardly revised from 4.1%. the Core PCE Price Index rose at a pace of 0.5% versus expectations for a 0.4% MoM growth rate and following October’s 0.5% reading, which was upwardly revised from 0.4%.

There were 205,000 initial claims for unemployment benefits in the US during the week ending December 18. This reading matched the market consensus.

According to the latest release by the US Census Bureau, US Durable Goods Orders rose by 2.5% MoM in November compared to market expectations for a solid 1.6% rise in sales. It also marked an acceleration in the MoM growth rate of sales after October’s 0.1% MoM reading, which was upwardly revised from -0.4%.

US Personal Income rose by 0.4% MoM in November, in line with consensus forecasts for a 0.4% MoM rise. That marks a slight moderation in income growth rates since October’s 0.5% reading. US Personal Spending rose by 0.6% MoM in November, also in line with consensus estimates for MoM growth rate of 0.6% and following October’s (upwardly revised from 1.3%) 1.4% MoM increase. 

Europe

European shares closed lower Friday, December 24, in limited trading due to the Christmas holiday, after the recent rally in global stocks on indications that the mutated Omicron may not derail the global economic recovery.

In a short pre-Christmas trading session, the pan-European STOXX600 index slipped 0.1% to 483.01.

The index ended the week’s sessions with gains of 1.9% this week.

The British FTSE index closed the Friday session unchanged, while the French CAC40 index closed 0.3% lower.

Stock markets in many countries, including Germany, Italy, Spain, Switzerland, and the United States, were closed on Friday for Christmas.

Wall Street

The three US indices ended the week’s trading with collective gains, as the Dow Jones rose by 1.7%, the Standard & Poor’s rose by 2.2%, and the Nasdaq Composite rose by 2.8%.

Oil prices fell on Friday in light holiday trading, leading to a three-day rally. Brent crude futures fell 0.47 percent to $76.49 a barrel. While US markets are closed.

Omicron

AstraZeneca said Thursday, December 23, citing an Oxford University study, that receiving a three-dose course of the AstraZeneca coronavirus vaccine is effective against the omicron mutant.

The study, which has not yet been published in a medical journal, showed that levels of omicron antibodies after receiving the third booster dose were higher than those of those who had contracted coronavirus disease and recovered normally.

After a three-dose course of the vaccine, the neutralizing levels against Omicron were similar to those of the anti-delta mutant after two doses, the company added.

The US Food and Drug Administration has approved the anti-Covid 19 drug, produced by Merck for adults. The newly approved drug is known as molnupiravir and is used to treat the Coronavirus.

Turkish Lira

The Turkish lira recorded its most decisive week ever on Friday, jumping more than 50 percent after billions of dollars in state-backed interventions in the market and a government pledge to cover foreign exchange losses on some deposits.

According to official data, the Turks did not sell dollars on Monday and Tuesday, indicating that they had little role in the massive market gains. And estimates of dealers showed that the state’s intervention in the market cost the central bank more than eight billion dollars this week.

The currency rose for the fifth consecutive day, touched its levels in mid-November, and recorded 10.7 Lira against the dollar.

On Monday, the lira plunged to an all-time low of 18.4 against the dollar after months of falling due to aggressive interest rate cuts and concerns about a sharp increase in inflation.