by Daniel Shvartsman
Investing.com – The last week of the stock market has started off on an unsurprisingly quiet note. While investors are hopeful that a Santa Claus rally will end a good year on major indices, challenges remain on the Covid front, as the holiday weekend flight cancellations clearly show. The news from China of the new listing restrictions marks another reminder of the challenges the economic giant has posed for investors this year, and oil is starting the week off on the wrong foot. Here’s what you need to know about the financial markets on Monday, December 27.
1. Omicron wreaks havoc even if it is light
While much of the rally and the arrival at record levels last week relied on reports that the Omicron variant of Covid-19 is proving to be smoother than previous variants, or at least poses less of hospitalization risks, the holiday weekend was a reminder of the havoc the virus can still wreak on the economy.
Airlines canceled nearly 1,000 flights on Christmas Day in the United States due to staff shortages and, Southwest attests, to weather problems. US airlines are trading low as a group in pre-market trading. As the number of cases continues to reach new highs in places stretching from New York to Australia, the cancellations are a reminder that while the cases are less severe, as we all hope, the quarantine necessary or the recovery of mild cases can further erase an already strained economy.
Read also: Inflation, Omicron, Rate hike: what to expect from 2022
2. China establishes new overseas registration guidelines
China has issued new guidelines for companies to list stocks overseas. The guidelines are likely to make it more difficult for Chinese companies to list entities with variable rights holders – VIEs – abroad, but they provide a legal framework that will allow them to do so.
It remains to be seen whether, against the backdrop of a long year for Chinese stocks and several regulatory crackdowns in sectors ranging from education and games to casinos and technology, the new guidelines will be welcomed as a welcome relief as they offer certainty, or if they will be considered too harsh. Early reviews are bearish – Ali Baba (NYSE :), JD.com (NASDAQ :), Baidu (NASDAQ 🙂 and Didi Global Inc ADR (NYSE 🙂 are among the Chinese companies whose US quotes are trading down more than 1% in pre-marketing trade.
Read also: Can Chinese stocks rebound in 2022?
3. “Santa Claus Rally” or just a slow week?
US futures are slightly higher; they are trading up 0.3% at 7:40 am ET, while they are up 0.2% and 0.35%. The last week of the year is usually a slower trading week as it falls between the winter break, and there isn’t much economic news this week. European markets were slightly higher at midday, while Asian markets closed a little lower. The path of least resistance for markets this year has been higher, and the first indications for Monday are that we may be heading in that direction today. The question, after the S&P closed at historic highs last week, is whether there is that much margin left in 2021?
Read also: What to expect from global markets in 2022: Growth and rise of small caps
4. Oil starts the week down, at least in the US
Oil started the week down more than 1%, or at least did. Trade down 0.1% at 7:40 a.m. ET. Oil rose 4% yesterday amid general optimism over the omicron variant and the global economic recovery, so it remains to be seen whether this is just generic volatility or a reaction to cancellations. theft and slowing consumer travel during the normally busy holiday season.
Also Read: 5 Key Factors To Watch For Oil In 2022 As Demand Recovers
5. Diverging paths for memes stock stars?
Some of the most popular memes stocks may be in the spotlight today. On the one hand, GameStop Corp (NYSE 🙂 saw a price target cut from the already bearish Ascendant Capital, causing stocks to fall 0.5% in pre-market trading. On the other hand, Spiderman: No way home continued to score high at the box office, achieving $ 1 billion in global ticket sales – the first post-pandemic film to do so – and reaching $ 467 million at the U.S. box office. This could excite shareholders of AMC Entertainment Holdings Inc (NYSE :), although so far shares are down 0.6% pre-market. During this time, Sony Group Corp (NYSE :), which directed the film, is trading up 0.9%, showing that the market recognizes the economic importance of the news.
And if we’re talking memes, it’s up 2% early in the session, ahead of its key cryptocurrency counterpart, which only rose 0.6%.
Read also: 3 cutting-edge investment themes to watch in 2022
Check out our full series on Market Outlook 2022 here.
(Posted at 7:05 a.m. ET, updated at 7:43 a.m. ET)