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31.12.2021 09:42 AM
US stock market on December 31, 2021

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S&P500

The market is at highs. Omicron is breaking records.

US indices declined moderately on Thursday, remaining near the highs of the year. The Dow Jones shed 0.3%, the NASDAQ Composite declined by 0.2%, and the S&P500 decreased by 0.3%.

Asian markets closed the last trading day of the year. Japan's stock indices also fell sharply by 0.4%, while China's indices rose by 0.3%.

Oil remains at the highs of December. Brent is trading at 79.30.

Gas on ICE futures trades around $1,000 to $1,100 per thousand cubic metres. The gas price has fallen from the highs after LNG tankers from the US were routed to Europe. The gas supply situation from Gazprom will become clearer in early January.

Putin and Biden had a direct conversation on the evening of December 30. They exchanged warnings and agreed on Russia-US and Russia-NATO security talks from January 9 to 15, 2022. The outcome of the talks could affect markets in Russia and Europe in the first half of January.

The number of coronavirus cases worldwide keeps rising. On Thursday, there were 1,890,000 new cases around the world. In the US, there were 570,000 cases. The UK saw an increase of 190,000. In France, the number of cases rose by 209,000. Spain and Italy reported +160,000 and +120,000 new infections respectively.

According to our source, who lives in New York, the US medical system can withstand a huge surge in omicron as hospitalization rates are relatively low. However, we think that conclusions can be drawn when the number of new cases at least stops rising, especially as fast as it is now.

The S&P 500 is trading at 4,778. It remains in the range of 4,750-4,810.

As can be seen, the US market does not pay attention to the huge outbreak of Omicron, even though the centre of the pandemic is now undoubtedly in the US, and in Western Europe. There is no doubt that in a few days Omicron will hit Eastern Europe as well. Experts expect an outbreak in Russia in January and February. Everyone is just hoping for a low lethality of omicron and a milder course of the disease, especially in vaccinated people.

The US jobs report yesterday showed that the number of new jobless claims rose by 198,000. Long-term unemployment fell to 1.716m.

Approximately 1,300 flights have been cancelled in the US on New Year's Day because of Covid disease among airline staff. These are largely domestic flights.

Elon Musk's electric-vehicle maker is poised to manufacture roughly 80% more vehicles this year than it did in 2020. Such a rapid growth has caused problems with the supply of chips for cars.

USDX is trading at 96.00 and is expected to be in the 95.70–96.30 range. The market will decide on the further course of the dollar in the New Year.

USDCAD is trading at 1.2730 and is expected to be in the 1.2660–1.2780 range. The pair failed to hold support and fell under pressure from high oil prices.

The US market is heading into the New Year on the highs and does not pay attention to the huge Omicron outbreak. A correction in January is very likely.

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