Santa eluding markets this year

A feast of negative headlines over the weekend is dampening sentiment at the start of the week as equity markets slide between one and two percent in Europe.

The US isn’t looking any better, with the open seen piling further misery on Friday’s performance. It’s hard to read too much into the moves at the moment, despite the clear dip in sentiment over the last couple of days.

Is this really omicron nerves as Europe imposes further domestic and travel restrictions, even embracing lockdown in the case of the Netherlands? Or a negative response to the hawkish shift from central banks around the world which was expected before and initially received a positive response?

Or is it disappointment at President Biden’s Build Back Better plan collapsing in a heap after Senator Joe Manchin withdrew his support for the USD 2 trillion package? That will certainly shave a little off growth next year and is a hammer blow to the Democrats ahead of the midterms.

Or is it more simple than that? The festive season is upon us; perhaps traders are turning the laptops off, traveling, spending time with family, and binging on treats and the usual array of Christmas films. The Santa rally may elude us this year after an impressive pre-Christmas rebound following the initial omicron shock. Given the amount of downside risks going into the new year, it’s hardly surprising to see investors adopting a more cautious approach as they log off for the holidays.

Erdogan doubles down again on interest rates sending lira down another 7%

Turkish President Erdogan continues to pile further misery on the lira and those that rely on it as he remained committed to cutting interest rates over the weekend, despite the currency plunging to new lows on an almost daily basis. His total disregard for the pain it’s going to cause is astonishing and he’s clearly in no mood to even assess the damage, let alone pull back. Nor is he even pretending there’s a line between fiscal and monetary policy anymore which is really disturbing.

Another volatile year but 2022 likely to be another exciting year for bitcoin

Bitcoin is continuing to edge lower as we approach the end of another impressive year for the cryptocurrency space. It’s made enormous strides over the course of 2021 which will leave many excited about what 2022 holds. But with speculation still playing an enormous role in the bitcoin space, it’s no surprise to see it more than 50% up this year and simultaneously more than 30% off its highs. With the recent trajectory, you wouldn’t be surprised to see both of those numbers end the year a little closer together.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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