Since the detection of the new variant of the coronavirus, both markets and governments have reacted unevenly. Restrictions are being introduced in one country, while in others life goes on as before. So at one time the markets may fall into a gloomy mood and at another into a good mood. The latter today may be served up by Australia's central bank.
The Australian economy is recovering quickly from the pause in growth caused by the outbreak of the Delta variant of the COVID-19 virus, according to the minutes of the Reserve Bank of Australia's (RBA) December meeting. High vaccination rates and significant policy support continued to sustain the recovery, it noted, adding that the emergence of the Omicron variant was a new source of uncertainty, but is not expected to derail the recovery. The board reiterated that it remains committed to keeping interest rates at a record low of 0.1 percent, while considering how and when to reduce $4 billion in bond purchases. The decision will depend on how the economy performs, with data on employment, inflation and spending particularly important. The first option was to reduce the pace of purchases from mid-February with an expectation of a likely end point in May. The second option was to reduce the pace of purchases and revise it again in May. The third option was to stop buying altogether, the release noted.
Positive sentiment is trying to prevail on the stock markets after recent declines. U.S. index futures seemed to rally on Tuesday. Dow Jones and S&P 500 futures each rose 0.4 percent in the morning, while Nasdaq 100 futures gained 0.6 percent and rose near 15800 points. Tuesday's move followed three down days for major stock indexes, driven perhaps by fears of a new strain of virus and a hawkish turn in Federal Reserve policy. Also weighing on sentiment was Democratic Senator Joe Manchin's opposition to the Biden administration's $2 trillion Build Back Better Act, which is expected to be voted on in the US Senate in January.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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