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Top 5 Things to Watch in Markets in the Week Ahead

EconomyNov 28, 2021 07:34AM ET
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© Reuters

By Noreen Burke

Investing.com -- COVID-19 is back on top of the agenda for investors amid fears that the new Omicron variant could stall the global economic recovery from the nearly two-year pandemic. The new strain may also raise doubts over how quickly the Federal Reserve can move to unwind stimulus to tackle spiraling inflation. Against this background, Friday’s U.S. jobs report and testimony on Tuesday by Fed Chair Jerome Powell and Treasury Secretary Janet Yellen will be closely watched. Oil prices will be in focus ahead of Thursday’s OPEC+ meeting. Meanwhile, Tuesday’s euro zone inflation data will be in the spotlight ahead of December’s keenly anticipated European Central Bank meeting. Here’s what you need to know to start your week.

  1. New pandemic wave?

Wall Street’s three main indices tumbled on Friday as they re-opened after Thursday’s Thanksgiving holiday with energy, financial and travel-related stocks bearing the brunt of the selloff, sparked by the discovery of the new coronavirus strain.

While little is yet known of the new variant first detected in South Africa, scientists said it has a high number of mutations that may make it vaccine-resistant and more easily transmissible than the Delta variant.

"Markets were celebrating the end of the pandemic. Slam. It isn't over," David Kotok, chairman and chief investment officer at Cumberland Advisors told Reuters. "All policy issues, meaning monetary policy, business trajectories, GDP growth estimates, leisure and hospitality recovery, the list goes on, are on hold."

Before Friday, investors had been upbeat about the strength of the economic recovery amid broad vaccine availability and advances in treatments, despite fears over steadily rising inflation.

  1. Jobs report

A robust November jobs report could underline the case for the Fed to speed up unwinding its $120 billion-a-month stimulus program at its next meeting in mid-December. But a fresh wave of the pandemic could throw those plans into doubt.

Concerns over spiraling inflation, coupled with signs of an accelerating economic recovery had prompted investors to begin pricing in a faster taper and earlier interest rate hikes.

Friday’s non-farm payrolls report for November is expected to show that the economy added 550,000 jobs, bringing the unemployment rate down slightly to 4.5%.

The economic calendar for the week ahead also features the Institute for Supply Management’s indexes of manufacturing and services, along with data on pending home sales, consumer confidence and the Fed’s Beige Book.

  1. Powell and Yellen testimony

Fed Chairman Jerome Powell, fresh from his nomination for a second term by President Joe Biden, is due to testify on the CARES Act, the central bank’s pandemic-era stimulus program, before the Senate Banking Committee in Washington on Tuesday. Treasury Secretary Janet Yellen is also due to testify.

A similar hearing will be held before the House Financial Committee on Wednesday.

Investors will be looking for fresh insights on the outlook for the economic recovery amid renewed pandemic uncertainty.

  1. Oil demand outlook

Oil prices plunged $10 a barrel on Friday, their largest one-day decline since April 2020, as news of the new Omicron variant saw countries rush to restrict travel, adding to concerns that a supply glut could swell in the first quarter.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) is due to meet on Thursday, after last week’s decision by the U.S. and other governments to release oil from strategic reserves in a bid to lower gasoline prices.

For its part, OPEC+ has stuck to monthly output increases of 400,000 barrels per day (bpd) since August, despite calls to increase output to drive down oil prices.

"OPEC's initial assessment of the coordinated (stockpile) release and the sudden appearance of a new variant of the coronavirus raises serious concerns about economic growth and the oil balance in coming months," PVM analyst Tamas Varga told Reuters.

  1. Eurozone inflation

The eurozone is to release flash inflation data for November on Tuesday. Consumer price inflation hit a 13-year high of 4.1% in October, and it is expected to stay well above the ECB’s 2% target into next year. Germany, Spain, and France are to release CPI figures on Monday and Tuesday.

With inflation surging the ECB is facing growing calls to tighten monetary policy, but with Europe battling a fresh surge of the virus and news of the new strain policy doves have fresh ammunition to push back against those calling for an early end to stimulus.

The ECB is expected to raise its 2022 inflation forecast at its upcoming December meeting. Investors also expect the ECB to announce that its pandemic-era asset purchase program will wind up in March, while stepping up its longer standing bond purchase program to offset the cut to stimulus.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (17)
Jamie An
Jamie An Nov 28, 2021 3:16PM ET
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Monday stock rebounds at bottom, it will be leaded by low death rate of omicron and too much over reaction in last Friday.
Dominik Szaro
Dominik Szaro Nov 28, 2021 3:16PM ET
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100% agree
László Tuba
László Tuba Nov 28, 2021 3:01PM ET
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All in all the Omicron mutation is very sad news for the mainkind.
László Tuba
László Tuba Nov 28, 2021 2:59PM ET
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Correction isn't equal the end of the world. It was't bigger(10%<) correction since the first Covid wave and oil sock. Maybe, it is the time...?
José López
José López Nov 28, 2021 1:41PM ET
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Time to buy
Liviu Achim
Liviu Achim Nov 28, 2021 1:41PM ET
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to buy what? it depends on the news about the new Omicron
William Faulkner
William Faulkner Nov 28, 2021 12:38PM ET
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Sadly this will not end. Viruses evolve and mutate.The virus that causes COVID-19 constantly changes, or mutates, producing new variants of the virus. Never ends.How convenient though.Oil drops significantly.Amazing how these news stories correlate.
Tony Huynh
Tony Huynh Nov 28, 2021 11:43AM ET
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I guess no tapering this year then lol, maybe in Feb
Dave Jones
Dave Jones Nov 28, 2021 11:34AM ET
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If the fed is buying 120b a month in bonds it's not really a recovery
New Jazenevd
New Jazenevd Nov 28, 2021 11:30AM ET
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Investors better ignore media noise and buy on dip. Modern media is profoundly harmful and even paying attention to it can distract and hurt.
Randall Paul
Randall Paul Nov 28, 2021 11:17AM ET
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how fun this is. great game
Wankel YU
Wankel YU Nov 28, 2021 11:02AM ET
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we again, 199 bigmac meal is not come yet
ZS Beck
ZS Beck Nov 28, 2021 10:57AM ET
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According to Angelique Coetzee, the president of the South African doctors association the new variant cause very mild or limited symptoms. So far nobody had to be treated in the hospital for it. All this panic and fear is unjustified. Do your research before causing any panic and fear. I guess the elite have a different plan.
John Niemokta
John Niemokta Nov 28, 2021 10:57AM ET
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The new strain us being used to drive fear back into the world by tyrannical governments hellbent on controlling its citizens.
William Faulkner
William Faulkner Nov 28, 2021 10:57AM ET
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Yep. Unfortunately our world has forgotten history is a good predictor of the future. Benjamin Franklin: "It is the first responsibility of every citizen to question authority." We've lost that. Only 536 people in this countryand they set the tone.
Nagy Róbert
Nagy Róbert Nov 28, 2021 10:33AM ET
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The fear is dead of your mind😎no fear....peace!☺️
likando liywalii
likando liywalii Nov 28, 2021 10:33AM ET
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Hi sir i just wanted to ask same thing
Kaveh Sun
Kaveh Sun Nov 28, 2021 10:23AM ET
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Tell me why cases in S Africa is at all time low if this variant is spreading faster than Delta. The media is a fear monger
jj mm
jj mm Nov 28, 2021 10:23AM ET
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S. Africa has already reported that in the variant is not more or less dangerous than the others variants. Why Europa UK USA are exaggerating?
Empire Destroyer
Empire Destroyer Nov 28, 2021 10:23AM ET
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because we need a dump before Santa rally and rather than using poor economic data or tapering for pullback they think using covid variant is better... my days
Aris dela Cruz
Aris dela Cruz Nov 28, 2021 10:23AM ET
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Are they reporting it right? The numbers, I mean
carol foulds
carol foulds Nov 28, 2021 10:23AM ET
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Chris Sundo
Chris Sundo Nov 28, 2021 10:11AM ET
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'..sudden appearance of a new variant of the coronavirus..' -- Some potential investor was sitting on the news for at least 14 days. The variant was first seen over 14 days ago.
Ravi Kiran
Ravi Kiran Nov 28, 2021 9:30AM ET
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So again the printing machines will be started up in US
Chris Sundo
Chris Sundo Nov 28, 2021 9:30AM ET
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Great idea! We could use MO MONEY to invest in the stock market or into bubble investments like real estate.
Zeb Fullmer
Zeb Fullmer Nov 28, 2021 9:30AM ET
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real estate isn't going anywhere. millions are coming in the country across the border. They have to live somewhere
wally spaller
wally spaller Nov 28, 2021 9:01AM ET
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no comments lol
Bill Pulak
Bill Pulak Nov 28, 2021 8:45AM ET
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Unless im missing something it loojs to me like all the strains have vern vaccine resistent? I know more people with vaccine that have gotten covid then the ones who have not? Gibraltar has 100% of its population double dose vaxxed and they have more cases now than ever? I think the only population benefitting from the vax are big pharma execs.
 
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