Weekly Recap 6 – 10 Dec.

Central bank decisions, Omicron developments, and US inflation data were the past week’s highlights.

The Reserve Bank of Australia decided to keep the interest rate at as low as 0.10% but left the door open to expectations of a rate hike earlier than previously thought in 2022. It indicated that inflationary pressures are increasing at an accelerating pace. The Bank of Canada also kept monetary policy unchanged while confirming that the Canadian economy is on the mend with inflation rising.

In a widely expected move, the People’s Bank of China (PBOC) slashed the banks’ Reserve Requirement Ratio (RRR) by 50bps.

Liu Shijin, an advisor to the People’s Bank of China (PBOC) warning, the Chinese economy could enter a period of ‘quasi-stagflation’.

“China’s economy could enter a period of “relatively quasi-stagflation” with slow growth and excessively high producer-price inflation.” He added.

Gold

Strategists at Société Générale said they see the yellow metal at $1,900 in the base scenario of their forecasts, and put in place other scenarios in which the economy recovers and gold falls to $1,700, and another in which gold rises to $2,100 and the global economy collapses.

Britain raised its alert level regarding the Corona pandemic to the fourth level from the third, on the recommendation of its top medical officials, in an effort to

To counter the rapid spread of the mutated Omicron strain of the Coronavirus

The fourth level means that health authorities see infection rates as high and put pressure on health care services.

USD

The US dollar achieved slight weekly losses due to inflation data that came within the range of expectations. As a result, the dollar index measures its performance against a basket of major currencies, scored 96.05 points, down 0.22%, and about 0.07% during the week.

As measured by the Consumer Price Index (CPI), Inflation in the US rose to 6.8% on a yearly basis in November from 6.2% in October, the US Bureau of Labor Statistics reported on Friday. That was in line with the median economist forecast. As per the CPI, the MoM pace of price increases came in at 0.8%, above expectations for MoM gain of 0.7%, but a slight deceleration from October’s 0.9% MoM reading.

There were 184,000 initial claims for unemployment benefits in the US during the week ending December 4, data published by the US Department of Labor (DoL) revealed on Thursday. That marked a new post-pandemic low. and, indeed, was the lowest such reading since 1969. This reading followed last week’s print of 227K (revised from 222K) and came in well below market expectations for 215K.

Wall Street

Stocks in the United States closed higher at the end of trading on Friday, as indices headed higher, and gains were recorded in the sectors of technology, consumer goods, oil, and natural gas.

At the end of trading in New York, the Dow Jones Industrial Average rose 0.60%, while the Standard & Poor’s 500 Index rose 0.95%, and the Nasdaq climbed 0.73%.

Among the leading stocks in the Dow Jones Industrial Average, Cisco Systems Inc. rose 2.95%, or 1.70 points, to 59.25. Microsoft’s share continued to rise at 2.83% or 9.44 points and closed at 342.54, while Apple’s share increased by 2.80% or 4.89 points to 179.45 at the end of the session.

As for the weakest performance at the end of the week’s trading, the share of Goldman Sachs Group closed down at 1.37%, or 5.43 points, and traded at 391.06. Boeing Co share declined by 1.20% or 2.50 points at 205.06, while Amgen’s share closed down 0.79% or 1.68 points at 210.89.

Oil

US energy companies added oil and natural gas drilling rigs for the sixth time in seven weeks. Energy demand continued to grow after it collapsed due to the Coronavirus last year.

The increase in rigs came despite the decline in oil price in six of the past seven weeks.

In its weekly report, Baker Hughes Energy Services said Friday that the number of oil and gas rigs, a preliminary indicator of future production, rose to 576 in the week to Dec. Since April 2020.

Thus, the total number of oil and gas rigs is up by 238, or 70 percent, over the same period last year.

The number of US oil rigs rose four to 471 this week, the highest level since April 2020, while the number of gas rigs increased by three to 105, the highest level since March 2020.