Markets Update Wednesday 22/12/2021 – Christmas Shopping

Frankfurt – 22/12/2021

Christmas Shopping

Shortly before Christmas, the mood of US consumers brightened unexpectedly, which indulged investors on Wall Street. They continue their stock shopping spree.

The chances of a Christmas rally have thus increased. The Christmas rally, also called the Santa Claus rally, usually takes place on the last five trading days of the year plus the first two trading days of the new year. Many market observers recently doubted that this calendrical effect would also occur this year, especially since the corona variant Omicron put the brakes on investors’ optimism.

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Furthermore, the financial markets also have to deal with higher inflation. According to the European Central Bank, consumers in the eurozone will have to live with higher inflation rates for longer than expected. “We know that inflation will continue to be high for quite some time, but also that it will come down over the next year. We are, however, less certain about how fast and how strong the decline will be,” ECB Executive Board member Isabel Schnabel told the French daily Le Monde. Next year, Europe’s monetary watchdogs expect prices to rise by an average of 3.2 per cent in the euro area.

US Markets at a glance

Wall Street investors tended to be positive today. The Dow Jones opened almost unchanged and then posted significant gains, ending the day with a gain of 0.74 per cent at 35,754.03 points. The tech index NASDAQ Composite was still in the red at the start but then turned positive and ended the day 1.18 per cent higher at 15,521.89 points.

Shortly before Christmas, investors remained uncertain about how exactly to position themselves because of the corona situation. Accordingly, trading was quiet.

Far East Markets at a glance

The Asian markets found no common direction on Wednesday. In Japan, the Nikkei closed with a small gain of 0.16 per cent at 28,562.21 points. Some tailwinds came from the weaker yen. The Shanghai Composite on the Chinese mainland fell by 0.07 per cent to 3,622.62 points by the end of trading, while the Hang Seng in Hong Kong climbed by 0.57 per cent to 23,102.33 units.

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The continuing concerns about the rapid spread of the coronavirus variant Omicron had a braking effect, primarily since the strong price increases in the USA were also explained with bargain purchases and less with new fundamental reasons for buying. According to Dow Jones Newswires, analysts at NAB commented that the number of infections in South Africa had allegedly fallen to the lowest level in a fortnight, at least slightly dampening the pandemic worries.

European Markets at a glance

The European stock markets gained on Wednesday. The EuroSTOXX 50, for example, started with a small gain and left the trading session with an increase of 0.83 per cent at 4,209.78 points.

The DAX opened the day slightly firmer and moved slightly higher for most of the day. Only in late trading did it move more clearly upwards. In the end, the leading index left the trading session 0.95 per cent higher at 15,593.47 points. In addition, the TecDAX rose strongly and closed 1.4 per cent higher at 3,850.30 points.

This broadly defended recent gains. “On the positive side, the buy-the-dips mentality remains intact,” said one market participant, according to Dow Jones Newswires, referring to the fact that the recent DAX lows towards the 15,000 mark were again quickly used to enter the market.

After the price slide at the beginning of the week, the market is now technically “clean”, which opens up the chance for price rises at the end of the year. However, there are also words of caution from other quarters with regard to the spread of the Omikron variant. The new restrictions in Germany after Christmas did not provide much of an argument for buying, they said.

Forex, gold, oil and crypto

Today, the euro recovered against the dollar on the foreign exchange market and was trading at 1.1325 dollars in the evening.

Oil prices also rose. A barrel of North Sea Brent cost 74.74 US dollars in the evening, 76 cents more than the previous day. A barrel of American West Texas Intermediate rose by 83 cents to 71.85 dollars. Yesterday, the American Petroleum Institute (API) reported a noticeable decline in nationwide crude oil inventories. 

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Gold gained significantly as well, raising $15 per troy ounce to $1,803.

Cryptocurrencies painted a similar picture as in the past days, partly consolidating their gains. The top two dogs, Bitcoin and Ether, lost around 2 per cent to $48,200 and $3,920, respectively, while Cardano rose 2.3 per cent to $1.32 and Polkadot added 7 per cent to $27. XRP held stable at $0.95, and Solana lost 1.8 per cent to $176. 

Corporate and world economic news

Economic data

According to the ifo Institute, delivery problems in the retail sector have once again worsened significantly in Germany. 81.6 per cent of retailers complained in December that not all ordered goods could be delivered. In November, it was still 77.8 per cent. This is according to a survey by the Ifo Institute. “Retailers are being doubly burdened right now,” says the head of ifo surveys, Klaus Wohlrabe. “Retailers cannot offer all products. And customers are reluctant to shop given the high incidence.”

The British economy grew slightly weaker in the summer than previously known. Economic output (GDP) rose by 1.1 per cent from the second to the third quarter, the statistics office ONS announced in London. A previous estimate had shown an increase of 1.3 per cent. Compared to the same quarter last year, the economy grew significantly by 6.8 per cent from July to September. This is slightly more than previously estimated.

The growth of the US economy in the third quarter of 2021 was slightly stronger than previously assumed. The Bureau for Economic Analyses (Bea) reported in its third release that gross domestic product increased at an annualised rate of 2.3 per cent from the previous quarter. Economists surveyed by Dow Jones Newswires had expected the Bea to confirm the 2.1 per cent reported in the second release. In the second quarter, GDP had increased by an annualised 6.7 per cent.

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