MARKET ENVELOPES

To watch:

No major economic data or company update expected

Opening call:

Europe faces a largely directionless opening session as trading ends for the year. In Asia, equities were mixed, the dollar and gold struggled, while Treasury yields and oil extended their gains.

Actions:

European stocks could struggle to gain ground Thursday morning after Wall Street faltered in a choppy session exacerbated by low trading volumes.

The S&P 500 and Dow Jones hit new highs on Wednesday amid what is known as the “Santa Claus rally,” but the Nasdaq struggled, ultimately closing 0.1% lower.

Investors for the most part allayed fears that Covid-19 could hamper the economic recovery in the United States, but struggled to find new incentives to push the rally considerably higher in the closing days of 2021.

“Despite global increases in Covid cases, markets are reflecting the new reality that Covid is here to stay although no longer on our terms than its own,” wrote Kevin Philip, managing director of Bel Air Investment Advisors, in comments by email, adding that next year he expects more “normalcy” to return to the world.

Forex:

The dollar was little changed in Asia, with the USD index remaining below 96.00, while the yen weakened slightly as fears about Omicron eased the appeal of safe-haven stocks.

Despite a greater possibility of short-term restrictions, Omicron’s rapid spread, more moderate results, and apparent ability to replace the more lethal variant Delta as the dominant strain mean it could lead to a more rapid return to normal, IG said.

Obligations :

Longer-term Treasury yields hit one-month highs, with the 10-year pulling back solidly above 1.54%.

Trade has been generally slow over the last week of the year as investors tried to gauge the impact of the Omicron wave on the Fed’s decision to tighten monetary policy. The announcement that the variant may not be as bad as initially feared indicates that inflation is likely to remain high and labor shortages may not worsen.

Energy:

Oil extended this month’s rally in Asia, after data on Wednesday showed a sharp drop in U.S. crude inventories, indicating more robust demand despite threats that Omicron would disrupt some trade and vacation travel activities. .

“It looks like fears of demand destruction caused by omicron have been greatly exaggerated,” Phil Flynn, senior market analyst at PRICE Futures Group, told MarketWatch in a telephone interview.

However, demand for Asian oil is expected to weaken. S&P Global Platts said the outlook for China is cautious amid continued enforcement action to eradicate Covid-19. The upcoming spring oil refinery maintenance season could also dampen Asian demand, Platts added.

The Dallas Fed said its quarterly survey of oil and gas executives found that, on average, they expected WTI to trade at around $ 75 a barrel by the end of 2022, which is roughly what a barrel is worth in today’s spot market.

The survey also found that oil and gas activity continued to expand from October through December, although respondents said inflation is a constant concern. Wages and benefits continued to rise amid new job growth, he added.

“Among exploration and production companies, the research and development cost index and the lease operating expense index reached their highest levels in survey history.

Metals:

Gold futures were lower in Asia, extending Wednesday’s losses, but remained above the key resistance level of $ 1,800.

“Gold’s attempts to stage a meaningful rally remain unconvincing,” Oanda said, expecting the precious metal to trade in a range of $ 1,790 to $ 1,815. “Traders cut long positions at the very first sign of trouble.”

Copper prices have also fallen. Recent trade volume has been quite low, suggesting weaker momentum as most downstream production activity slows, Huatai Futures said. The brokerage expects close trading within a limited range for the metal, as limited supplies keep prices high, but substantial increases are limited by low buying interest.

Iron ore futures gained more than 2% in China, rebounding from a slowdown earlier in the week. The recent drop in prices has likely sparked renewed interest from traders and steelmakers, Huatai Futures said, noting that improving port transaction volumes is a sign of better business sentiment.

The brokerage is neutral on the short-term outlook for commodities given the seasonal weakness in demand at the end of the year, but expects good longer-term replenishment demand.

MAJOR TITLES OF THE DAY

S&P 500 energy sector on course for record annual gain

The energy sector of the S&P 500 Index is set to post the biggest percentage gain on record, marking a comeback for an industry hit hard by early closures from the pandemic.

The energy sector has gained nearly 50% so far this year thanks to a rebound in consumer travel, breaking its latest high of around 25% in 2016, according to FactSet data dating back to at least 1990. US crude price and world oil benchmark. Brent crude has also gained over 50% this year.

United States records record number of new Covid-19 cases

Covid-19 cases in the United States continued to rise, reaching a pandemic record of 265,427 cases per day on average on Tuesday, according to a Wall Street Journal analysis of data from Johns Hopkins University.

The average for Tuesday was about 13,400 more than the previous record of January 11, 2021, although there was less testing during the early stages of the pandemic.

Biden, Putin call for US to say ‘time of crisis’ for Ukraine

President Biden and Russian President Vladimir Putin plan to hold talks on Thursday ahead of high-level negotiations to deal with what a senior US official has described as a “moment of crisis” over Russia’s military build-up near Ukraine.

The Biden-Putin appeal was requested by the Russian side, a senior official in the Biden administration said on Wednesday. This comes as Moscow urged the United States to rule out the possible expansion of the North Atlantic Treaty Organization to include Ukraine and Georgia and to cut the alliance’s military ties with these countries and other former Soviet republics.

Northvolt develops first lithium-ion battery cell for European company

Swedish battery maker Northvolt said on Wednesday it had created a lithium-ion battery cell, the first from a European company, and planned to ship it to companies to power electric vehicles next year.

The market is currently dominated by Asian automakers, who have built or are building factories in Europe to supply batteries to automakers there, as demand for electric cars skyrockets. Fueled by generous government incentives for buyers, Europeans are buying electric cars at a record pace, helping the continent overtake China as the world’s largest electric vehicle market.

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Major events expected for Thursday

5:30 a.m. / NED: December Producer Confidence Survey

5:30 am / NED: Nov PPI

7:00 a.m. / UK: national house price index in December

8:00 a.m. / SVK: Dec. Economic survey

8:00 a.m. / SVK: Dec. Economic sentiment indicator

8:00 a.m. / SWI: Dec. KOF Economic Barometer

08: 00 / SPN: Dec Flash CPI Estimate

09: 00 / BUL: Nov PPI

10: 00 / CYP: October Industrial Production Index

10: 00 / GRE: Nov PPI

10: 00 / CRO: Nov Retail

10: 00 / CRO: November industrial production volume index

11: 00 / POR: Nov Industrial production index

1:00 p.m. / POL: Quarterly balance of payments for the 3rd quarter

16: 59 / SPN: Oct. Monthly balance of payments

Every hour in GMT. Powered by Kantar Media and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

December 30, 2021 00:36 ET (05:36 GMT)

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