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Omicron Makes Markets Worry as Cases Confirmed in California, Private Payrolls Beat Expectations & FTSE 100 Reacts to Higher House Prices

U.S. indices drop as Omicron case confirmed in California

Indices in the United States started lower on Wednesday, as markets reacted to the news that a case of the Omicron variant had been found in the country.

It was confirmed that the case of the mutated variant was discovered in California, where the individual who tested positive is currently quarantining.

In a statement regarding the news, Dr. Fauci stated that, “The individual is self-quarantining and all close contacts have been contacted and all close contacts, thus far, have tested negative”.

💡 Europe finds Omicron to be ‘mild’ so far
Many European and African countries are finding Omicron cases to be ‘mild’ or asymptomatic, nevertheless, health officials are suggesting people get vaccinated. Moderna and other pharma companies are moving forward with developments in new vaccines and pills

Speaking at a White House briefing, Dr. Fauci added that, “We feel good that this patient not only had mild symptoms, but actually the symptoms appear to be improving”.

After starting the session in the red, markets recovered slightly before selling off into the close, with the Dow down 1.34%, The NASDAQ off 1.83% and the S&P 500 fairing the best with “only” a 1.18% loss.

Private payrolls higher, days before key NFP report

Days before the release of November’s Non-farm payrolls report, it was reported that private payrolls had unexpectedly surpassed market expectations.

Figures released by the ADP on Wednesday, showed that payrolls increased by 534,000 last month, which is above forecasts for a 506,000 increase.

In a statement released following the report, the ADP stated that, “It’s too early to tell if the Omicron variant could potentially slow the jobs recovery in coming months”.

Markets now await Friday’s NFP report, where it is expected that 550,000 jobs would be added to the U.S. economy.

Many expect that a strong NFP report will give the Federal Reserve further validation in commencing the Tapering of its QE program.

FTSE 100 boosted by rise in house prices

In the United Kingdom, the FTSE 100 was marginally higher, as it was reported that house prices rose last month.

Data from mortgage lender Nationwide showed that prices increased by 0.9% last month, in comparison to 0.7% in October.

London’s FTSE 100 closed 1.55% higher on the data, as the final reading was 0.4% higher than markets expectation for a 0.5% monthly increase.

💡 What are the effects of this?
The continuing rising prices appear to be in part down to a reduction in the supply of houses available to buyers. The October property market was the quietest for almost a decade, according to data from HM Revenue and Customs, as house sales were 28% lower in October than a year earlier after a record surge in activity earlier in 2021.
Recent figures from the Bank of England showed the number of mortgages approved for UK house purchases fell in October to the lowest level in 16 months.

GBPUSD also rebounded, as it moved away from its 2021 low of 1.3194, which it recorded in Tuesday’s session.

It is also expected that the Bank of England will raise rates in upcoming months, as a means of combating rising consumer prices.

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Eliman Dambell

Senior Market Analyst

 

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