Whilst markets bounced back at the beginning of this week, comforted by reports that so far it does not look like there is a great degree of severity to the Omicron variant, it is still the elephant in the room, and as we said earlier in the week, until clarity is obtained, markets are likely to trade on headlines causing volatility in the short term.
Casting our eyes and ears beyond the noise, we saw growth in the UK’s construction industry on Monday, with fewer firms reporting supplier delays, and input cost inflation easing. This is an early (and welcome) sign that some of the pressures behind inflation could be starting to ease.
Elsewhere, eurozone gross domestic product (GDP) – a measure of economic growth – was released this week. It reveals a boost to the economy due to a rise in demand, showing continued recovery.
With payment provider Barclaycard sharing this week that consumer spending grew 16% in November, it’s beginning to look a lot like Christmas, and it is looking increasingly likely that we could see a Santa rally as consumers buy Christmas gifts, crackers, decorations and the like, daring to hope there may be a more “normal” Christmas this year compared to last Christmas.
Later today, Olaf Scholz is expected to be sworn in as chancellor of Germany. And he’ll have his work cut out – replacing long-time leader Angela Merkel, whose global approval ratings have only strengthened since the start of the pandemic.
Later in the week, we have US CPI data, and China CPI and PPI data.
Hannah Owen, Portfolio Specialist.