Stocks push higher again

We’re seeing improvements in risk appetite again on Tuesday as fears around Omicron continue to ease following earlier reports of less severe symptoms.

This is still an extremely fragile market but the early signs are offering some hope. The initial announcement a couple of weeks ago had investors fearing the worst and so far, that’s not what we’re seeing. Time will tell whether investors are getting ahead of themselves but a couple of days without a negative Omicron headline has the dip buyers flooding back in.

Given the concern among global leaders and various organisations over the last couple of weeks, I struggle to see all of the updates being as positive, which makes more two-way price action a strong possibility.

And if it is, then we just have high inflation and monetary tightening to contend with at a time when the global economy is hardly thriving. Of course, that’s a better outcome than higher inflation, rising rates, and Omicron lockdowns but it’s far from perfect which may spoil the party a little. A Santa rally may be underway but it will be a bumpy ride.

Surprising calm around China

There’s a surprising element of calm around Chinese growth as well; a firm belief that authorities have this under control and will stop the Evergrande crisis from spilling over into something much more devastating. We’ll see how the restructuring goes but with the company now failing to source the funds to make coupon payments, it’s about to get real which is probably at least partly why we’re seeing support is arriving in the form of a RRR cut. Further measures will be necessary but so far it’s been enough to ease the nerves.

Can bitcoin find some bullish momentum again?

Bitcoin provided a brief reminder that huge price swings go both ways when it plunged on the weekend but it’s recovered much of those losses in the days that have followed. It’s even climbed back above USD 50,000 but some big tests remain if it’s going to recapture some bullish momentum in these uncertain times. The next one is USD 53,500 which was a big area of support last month.

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

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