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U.S Stocks Rebound from Yesterday’s Omicron Selloff, EU Commission Issues $390 Million Fine in Forex Scandal & Oil Prices React to OPEC+ Output Decision

US shares surge back after yesterday’s Omicron selloff

American stock markets were on the move today shrugging off yesterday’s reported case of the Omicron variant of concern.

After falling into the close on Wednesday, the major indices were back with a vengeance on Thursday even as a second case of Omicron was reported in Minnesota.  The market euphoria was partly attributed to the mildness of the two cases and the so far relatively minor increase in restrictions put in place as the Biden administration monitors the situation.

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Heading into the close of trading airline, casino and energy stocks led the gains with Delta Airlines, MGM Resorts and Norwegian Cruise Line all gaining over 5%.

The Dow increased by 615 points (1.81%) to 34,637.25, while the S&P rallied by 1.41%.  The tech-laden NASDAQ saw the smallest gain but was still up 0.81% toward the end of the trading session.

Banking shares fall, after European commission issues $390 million fine

On Thursday, it was announced that the European Commission had fined as many as five investment banks, for their role in a Forex trading scandal.

It was reported that Barclays, UBS, Credit Suisse, RBS, and HSBC were fined a combined total of $390 million, for their role in the scandal.

These banks were found to have participated in the illegal sharing of information, and plans, for the trading of G-10 currencies.

💡 Insider trading, when is it legal, when is it illegal
Insider trading is deemed to be illegal when the material information is still non-public. Material nonpublic information is defined as any information not accessible to the general public that could substantially impact the stock price of that company.

Legal insider trading happens regularly when company insiders engage in trading company stock as long as they report these trades to the SEC in a timely manner. The Securities Exchange Act of 1934 was the first step to the legal disclosure of transactions of company stock. For example, directors and major owners of stock must disclose their stakes, transactions, and change of ownership.

In a statement relating to the fine, the commission said that “Our cartel decisions to fine UBS, Barclays, RBS, HSBC and Credit Suisse send a clear message that the Commission remains committed to ensure a sound and competitive financial sector that is essential for investment and growth”.

Barclays’ share price was the most impacted and was down 1.28% as of writing.

Oil prices unsettled by OPEC+ output decision

Oil prices were volatile on Thursday, as OPEC+ and its allies met to discuss output goals for upcoming months.

It was announced that the Cartel, which includes Russia, would look to increase output by 400,000 barrels per day in January, as it looked to avoid further tensions with Washington.

In November, the Cartel was under pressure from the Biden administration to increase its supply, in response to rising energy prices.

💡 OPEC’s influence and Inflation
As the energy crisis continues to play a role in surging consumer goods, the U.S and other major oil-consuming nations hope to prevent a further boost to inflation by cooling off gasoline prices.

Although weaker crude prices may have OPEC and Russia on the back foot for now, their influence over the oil market is only set to increase longer term as their share of global production rises.

However, OPEC+ mainly stood firm, leading the United States to begin strategic releases of its own oil reserves.

Prices of WTI crude have fallen by as much as $20 since this decision was made as new Lockdowns came into effect and the Omicron variant of concern emerged.  Now OPEC+ looks set to make space for marginal increases of supply starting next month. 

“Letting losses run is the most serious mistake made by most investors.”

– William O’Neil

Eliman Dambell

Senior Market Analyst

 

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