Omicron cases continue their rise in Europe and the Americas. However, stock markets are buoyant. Elon Musk has used all his Tesla (NASDAQ) options. This could reduce the selling pressure on stock while inventories continue to fall. The stock remains highly centralized. This is what you need to know about financial markets Wednesday 29 December.
1. Omicron cases soar
As the year winds down, risk sentiment is likely to rise. However, Covid cases are also on the rise. Trading could become volatile next year as investors return.
According to the World Health Organization’s Weekly Update, Tuesday’s update showed that new Covid infections increased by 57% in Europe and 30% in the Americas.
France was the leader, reporting Europe’s highest daily number of cases with 179.807 on Tuesday. However, England, Portugal, Italy and Greece also reported record highs.
Although there are mobility restrictions in Europe, many governments hesitate to implement wholesale lockdowns again. They cling to studies showing that the Omicron strain is more harmful than the Delta version.
If cases continue to rise, it’s not clear how long this stance will last. The World Health Organization warns that health systems could be on the verge of collapse due to the rising number of cases.
2. Stocks will edge higher; Omicron in Focus
U.S. stocks will open slightly higher Wednesday amid optimism that Omicron’s economic impact won’t be as severe as initially feared.
Dow Jones futures were up 45 points or 0.1% by 5:25 AM ET (1025 GMT) S&P 500 Futureswere down 10 points or 0.2%, and Nasdaq100 futures climbed 60 points or 0.4%.
Blue chip Dow Jones Industrial Average closed almost 100 points higher Tuesday, its fifth consecutive day of gains. However, the and Nasdaq composite dropped marginally.
According to Johns Hopkins University data, the number of Covid cases is on the rise in America. There are more than 4.1 Million Covid cases reported this month. This is well above the November total of 2.54 millions.
The Biden administration made it clear, however, that a national lockdown was not in the cards. The Centers for Disease Control and Prevention has recently reduced its isolation recommendation for those who have tested positive for HIV if they don’t have symptoms.
Corporate news: Apple (NASDAQ) has suspended operations at Foxconn, Sriperumbudur in India for its iPhone product line. This was due to poor working conditions. JD.com (NASDAQ).com has raised its share repurchase program from $2 billion to $3 billion.
3. Bitcoin still too centralized
On Wednesday, Bitcoin fell more than 3% to $47.668 as the most well-known and largest cryptocurrency dropped. This is in addition to a drop of more than 6% Tuesday. The digital currency is now down 31% compared to Nov. 10, when it was at $69,000.
Investors are now more interested in cryptocurrency markets. Bitcoin reached $1 trillion in market value in February, making it the most popular investment market this year.
A new study has shown that Bitcoin’s holdings are still too concentrated after 12 years of existence. The National Bureau of Economic Research found that 27% of the 19,000,000 Bitcoins in circulation are owned by the top 1% Bitcoin owners.
Researchers Igor Makarov, Antoinette Schönar, wrote that Bitcoin’s inherent concentration made it vulnerable to systemic risks. This also implied that most of the benefits from further adoption would be disproportionately shared with a few participants.
Also read: 5 Cryptocurrencies Beyond Bitcoin to Keep You On Your Radar in 2022
4. Tesla sales pressure decreases
Tesla investors, an American electric vehicle manufacturer, will rejoice to learn that Elon Musk, CEO, has exercised all his options. This could signal an end to his stock sale.
Tesla shares lost 25% after Musk asked his Twitter followers if they wanted to sell 10% of their holdings, primarily in order to pay a tax bill.
Musk stated last week that he would achieve his 10% target “when the 10b preprogrammed Sales complete”, which was something the company claimed was done on Tuesday.
5. Falling U.S. inventories help crude
After the rally of the previous session, oil prices stabilised Wednesday as industry data showed a significant fall in U.S. crude oils stockpiles. This suggests continued demand from the largest consumer on the planet.
U.S. crude oil futures fell 0.1% to $75.92 per barrel at 5:25 AM ET. Futures rose 0.1% to $78.78 per barrel at $78.78. Both contracts are near their highest trading levels for a month.
Late Tuesday’s data from the American Petroleum Institute showed that crude oil stocks in the United States fell by 3.1 Million barrels during the week ending Dec. 24, according to the American Petroleum Institute .
The U.S. Energy Information Administration will release official data later Wednesday. If confirmed, it would be the fifth consecutive week of declines, the longest streak since September.
Crude oil is on track for its largest annual gain in over a decade thanks to the global recovery from the Covid pandemic and the Omicron variant.
Next week, OPEC+ and Russia are due to meet to discuss production policies for 2022.