- Some investors wonder whether Omicron risks were prematurely dismissed as worries escalate
- Oil slumps as traders weigh demand risks
- Market holiday closures continue on Tuesday in the UK, New Zealand, Australia, and Canada
- US Pending Home Sales print on Wednesday
- Weekly Initial Jobless Claims in the US are reported on Thursday
- The Stoxx Europe 600 rose 0.2%
- Futures on the S&P 500 were little changed
- Futures on the NASDAQ 100 rose 0.2%
- Futures on the Dow Jones Industrial Average were little changed
- The MSCI Asia Pacific Index was flat
- The MSCI Emerging Markets Index held steady
- The Dollar Index rose 0.2%
- The euro was little changed at $1.1309
- The Japanese yen fell 0.3% to 114.69 per dollar
- The offshore yuan was steady at 6.3745 per dollar
- The British pound was little changed at $1.3397
- The yield on 10-year Treasuries declined two basis points to 1.48%
- Germany's 10-year yield advanced two basis points to -0.23%
- WTI crude was down 1.11% at $72.95 a barrel
- Brent crude fell 0.45% to $75.80 a barrel
- Spot gold slipped 0.2% to $1,806.09 an ounce
Key Events
US futures for the Dow Jones, S&P 500, NASDAQ and Russell 2000, along with European stocks, all struggled to rally on Monday amid significant travel disruptions caused by the Omicron variant during the holiday weekend.
Treasury yields fell and the US dollar rose.
Global Financial Affairs
At time of writing, contracts on the S&P 500 and NASDAQ 100 were trading in the green, while Dow Jones futures were flat even as Russell 2000 futures were lower. This paradigm—a reversal of the cyclical rotation—is the roadmap for investing according to a world subject to social restrictions.
Value stocks, most associated with the opposite ends of the market cap spectrum—since the Dow lists mega-cap blue-chip shares and the Russell 2000 is home to small-cap domestic firms—are struggling today. Conversely, growth shares, as represented by stocks on the tech-heavy NASDAQ 100 and the S&P 500, which is currently overweight technology firms, are gaining.
In Europe, a slump in the energy sector—tracking lower oil prices—offset an advance in real estate stocks, forcing the STOXX Europe 600 Index to give up a rally.
Developments out of China were a case of good news/bad news for investors. On the one hand, over the weekend, China saw its worst daily jump in COVID cases in 21 months, with infections more than doubling in the northwestern city of Xian. On the other hand, the Sino central bank, the PBoC, promised more significant support to the country's economy. The Shanghai Composite remained flat, reflecting investor ambivalence.
South Korea's KOSPI underperformed regional peers, losing 0.43% of value, followed closely by Japan's Nikkei 225 which declined 0.37%.
Markets in Australia, Hong Kong, the UK, and Canada are closed today for an extended Christmas holiday.
Yields on the 10-year Treasury fell for a second day, as investors increased their safe-haven positions.
Rates retreated from the top of a symmetrical triangle, whose downside breakout would be in the service of the preceding double top. In turn, the successful completion of the double top's implied target would retest the neckline of a massive double top since February.
The dollar rose for the first time in five sessions.
The greenback found support at the bottom of an ascending triangle, a pattern indicating that buyers raised their bids while sellers were willing to take a risk only at the highest prices.
Friday's trading produced an inverted hammer with today's gains confirming its bullishness. If the price closes today above Friday's intraday high, it will also complete an Evening Star. However, given the short decline that preceded it, there is no significant interest in this move. We expect the triangle's upside breakout to trigger another leg higher, testing the 98 levels.
Gold has retreated on dollar strength after reaching its highest level since Nov. 19 on Friday.
Bulls of the precious metal may struggle to complete a rounding bottom, a pattern whose culmination is difficult to determine due to its rolling form. However, if the price of the yellow metal closes above $1,820, the highest within the design, we'll call it a bottom.
Bitcoin was flat for a fourth day.
The largest cryptocurrency by market cap struggled to maintain a rally after failing to remain above its uptrend line. The cryptocurrency's technicals are alarming, signaling the crypto isn't about to head higher.
Crude oil slumped this morning, as trader fears overcame risk appetite. Market anxiety continues to escalate that Omicron-fueled airline cancellations, which wiped out thousands of scheduled flights during the Christmas weekend, will hit energy demand. Adding to the worries, some cruise lines canceled stops after onboard virus outbreaks.
WTI retreated this morning, yet still remained above a bullish ascending triangle. If the price holds above $73, we expect the energy commodity to rise to $83 on momentum.