In the first three days of last week, American indices traded without significant changes. Markets were closed Thursday for Thanksgiving. On Friday, a wave of significant sales swept around the world due to the fact that a new strain of coronavirus infection was discovered in South Africa, which scientists already call the most dangerous in comparison with other Covid analogues. The strain has a large number of mutations, some of which are of concern, according to the WHO. The organization also said that current PCR tests can detect this strain of coronavirus, which is called Omicron. To date, no cases of the new COVID-19 variant have been reported in the United States. American indices closed with a decline last week. Thus, the S&P 500 lost 2.2%, the Nasdaq 100 fell 3.3%, the capitalization of the Russel 2000 index of medium and small capitalization decreased by 4.2%.
Negative news regarding new outbreaks of coronavirus infection began to come more often from Europe. Thus, Austria and Slovakia have introduced a national lockdown. In Slovakia, over the past two days, more than 10 thousand new cases of infection per day have been detected in the country. In Germany over the past day, 76,414 cases of coronavirus infection were detected, which is the highest daily rate during the COVID-19 pandemic. In total, more than 5.65 million cases were recorded in Germany, the number of deaths exceeded 100 thousand.The US government advised Americans to avoid traveling to Germany and Denmark. Morocco has suspended flights with France. The UK has suspended travel of its citizens to six African countries, Israel is preparing to impose a similar ban due to the new variant of COVID-19. Last week, the European Euro stoxx 50 index plunged 6.2% over the week.
Thus, Omicron may become a new risk factor for the global economy, which can significantly aggravate the situation with supply chains and business activity in various regions of the world. On the other hand, if the situation worsens, regulators in developed countries are likely to prefer to abandon tightening monetary policy, which is generally positive for financial markets. In our opinion, in the current situation it is too early to draw conclusions, since it is necessary to wait for more detailed information about the new strain. Nevertheless, it can be assumed that in the event of a negative scenario and new camp restrictions, companies representing the technology sector, in particular those benefiting from the remote world, will be able to receive significant support. On Friday, Zoom and Peloton became the best papers in terms of dynamics.
Last week, investors closely followed the macroeconomic statistics in the US. The US economy expanded 2.1% in the third quarter at an annualized rate, revised data from the US Department of Commerce showed. Earlier it was announced a rise of 2%. Analysts on average expected a revision to 2.2%, according to surveys by Trading Economics and MarketWatch. US GDP dynamics in July-September was the worst since the economic downturn in early 2020 caused by the COVID-19 pandemic. For comparison, in the second quarter of this year, the American economy expanded by 6.7%. Incomes of the US population in October increased by 0.5% compared with the previous month, according to data from the country’s Department of Commerce. At the same time, the expenses of the Americans increased by 1.3%. Analysts on average expected the first indicator to increase by 0.2% and the second to rise by 1%. The number of Americans applying for unemployment benefits for the first time fell by 71 thousand last week to 199 thousand people. This is the lowest figure since November 1969, when the weekly number of applications was fixed at 197 thousand.
This week, the most important data that can have a significant impact on the market will be the US labor market figures for November, which will be published on Friday. On Tuesday, an online meeting of the OPEC + Joint Monitoring Committee will take place. The OPEC + ministerial online meeting will take place on Thursday. Concerns over the emergence of a new strain of coronavirus have prompted a sharp decline in key oil grades, which could adjust the plans of OPEC and its allies. OPEC experts warned of the possibility of a strong surplus in the event of a release of part of the reserves. The Fed’s Beige Book will be published on Wednesday, and the Eurasian Congress kicks off on Thursday.