- Omicron and its impact on the global economic recovery remains a factor that investors face into the close of 2021. The World Health Organisation has stated that it believes that the virus that causes COVID-19 is unlikely to go away entirely and will probably settle into a pattern of transmission at low levels. Still, it will be a bumpy road until then. Governments and policymakers are prone to knee-jerk reactions until all the data surrounding this latest variant and what it means as we advance is clearly understood there will be lockdowns and restrictions on movements that will impact economic dynamism. The good news is that we are potentially at that point where COVID-19 has learned to live with its host, and we as humans are learning to survive it.
- Investors will be keeping a close eye on the oil markets as we exit 2021, given its direct impact on the inflation problem plaguing many regions. The price of Brent crude is on track to break above the $80.00/bbl mark today, adding to the seven days worth of gains already in the bag. The driver for the latest move higher has been a continued decrease in U.S. crude stockpiles which shows that Omicron has thus far not dented mobility in the U.S.
- Equity markets are again on the front foot in Asia, driven by a strong finish in the United States overnight. The S&P 500 and Dow Jones closed at fresh record highs at 4793.06 and 36488.63, respectively.
- The dollar and yen are trading at the lower end of their recent ranges as risk sentiment improves. However, flow is light and what trading there is, is very short term in nature, with those still present at their desks aiming for small gains on small positions into the close of the year. In terms of emerging markets, the TRY continues to weaken despite surging 50% last week following state intervention. The ZAR has another day of losses shedding just over 20 cents on the day. There is no local reason to attribute the losses to, rather contagion effects resulting from the TRY losses and break of some key technical levels to the topside in thin trade.
- Looking at the day ahead, U.S. President Joe Biden and Russian President Vladimir Putin are expected to speak today. Reuters have reported that a range of topics are on the cards, including upcoming security talks between the countries and a tense situation in Europe. The call is expected to take place at 20.30 GMT.
- On the economic front, Kenya and Zambia are coming to market with short term bill auctions, while Egypt will be releasing its Q3 GDP reading. Zambia is scheduled to release its trade balance for Nov which will be closely watched given that a strong reading will support the Kwacha. The United States has a busy session ahead with Initial Jobless Claims, and Chicago PMI due for release.