Market mood recovered this past week around the world. On Wall Street, the Nasdaq 100 and S&P 500 gained 3.82% and 3.65% respectively. Across the Atlantic, the Euro Stoxx 50 and FTSE 100 climbed 2.95% and 2.62% respectively.
In the Asia-Pacific region, the Nikkei 225 climbed 0.89% while Australia’s ASX 200 jumped 4.05%. Volatility was crushed, with the VIX market ‘fear gauge’ sinking about 39% in the worst week since June 2016.
Concerns about the Omicron Covid-19 variant faded amid preliminary reports that the Pfizer BioNTech vaccine neutralized Omicron with a third dosage.
Towards the end of this past week, an in-line US CPI report, showing inflation around a 40-year high, did little to further boost hawkish Federal Reserve monetary policy expectations. Sentiment also remained intact despite Evergrande, a troubled Chinese property giant, being declared in default following two missed coupon payments this past week.
Taking a look at foreign exchange markets, the haven-linked US Dollar broadly underperformed. The Australian Dollar saw the best weekly gain against the Greenback since August. Similarly, the anti-risk Japanese Yen weakened. Growth-linked crude oil prices soared, with WTI seeing its best 5-day gains since late August. Gold prices were relatively flat, rising Treasury yields offset a weaker US Dollar for XAU/USD.
Central banks from the world’s largest economic powerhouses are on tap. All eyes are on the Fed, where traders will be tuning in for their economic projections and decision on whether or not policymakers will speed up the pace of tapering asset purchases.
The European Central Bank, Bank of England, and Bank of Japan are also on top for the Euro, British Pound, and Japanese Yen respectively. Commentary on their views on inflation will be in focus. Speaking of, CPI will be released from the United Kingdom and Canada. Australia releases its latest jobs report.