Noreen Burkhart

Investing.com — Developments around the Omicron coronavirus variant will continue to be the main driver of market sentiment in the week ahead and this news flow, together with a hawkish turn by the Federal Reserve, mean Friday’s inflation data will be in the spotlight. Broad-based volatility in the market, which fell on Saturday, appears to be expected to continue. Meanwhile, the UK is to release October GDP data ahead of the Bank of England’s December meeting. Here’s what you need to know to start your week.

1. Omicron uncertainty

Omicron cases continue to increase in many countries, however scientists are still unsure if the disease is more serious than other variations, what the severity is and what the level of protection provided by COVID-19 vaccinations. This information will be available in a few weeks.

Omicron seems to spread more quickly than Delta, which account for about 99% of the current transmissions.

Just as nations were emerging from lockdowns caused by Delta, the new strain of malware has ravaged financial markets and destabilized the global economic recovery.

Friday’s warning by the International Monetary Fund was that its estimates of global economic growth will be lower due to this new version.

2. Inflation data

The highlight of the economic calendar will be Friday’s November consumer price inflation data. The U.S. CPI accelerated 6.2% during October. This was the fastest annual growth in 30 years, due to a global supply crunch. It is expected that it will rise 6.7% by November.

A strong reading may underline the Federal Reserve’s expectations of a faster tapering.

Jerome Powell, Fed Chairman, stated last week that central banks will discuss the faster end of their stimulus program during its monthly meeting this month. It also suggested speculation about interest rate rises.

Powell stated that the term “transitory”, which Powell used to refer to surging inflation, was not the best word.

Friday’s employment report, showing the smallest growth in job creation so far in 2021 did little to alter expectations for faster tapering. The economy gained just 210,000 jobs last November. However, unemployment dropped to 4.2% in November. It was the lowest rate since February 2020. And wages rose.

3. Volatility expected to persist

Last week’s double-whammy of uncertainties over Omicron and the possibility of Fed tapering faster caused stock prices to fall.

Investors are expected to keep dumping their shares in growth and tech companies to make way for value stocks. These include banks, financials and energy companies, hoping they will perform better once the Fed eases its monetary policy.

While value stocks rose earlier this year, the U.S. economic recovery caused them to falter. Investors switched back to technology shares later.

“The Fed brings the punch bowl and they are the ones that remove the punch bowl,” Michael Antonelli, strategist at Baird told Reuters. “Markets are quickly repricing their view of the future.”

4. Bitcoin selloff

Bitcoin, which is the most valuable cryptocurrency in terms of market value, dropped as high as 20% Saturday amid widespread sell-offs in digital currencies in the aftermath volatile weeks on the equities markets.

Ether, second-largest cryptocurrency, fell more than 10%, before it pulled back. Other digital currencies that are widely traded, including and, also dropped.

Crypto investors may feel skewed by concerns about a crackdown on regulatory issues.

Representatives from several major cryptocurrency companies, such as Coinbase (NASDAQ) will testify in front of the U.S. House Financial Services Committee on Wednesday. This is amid calls to regulate the volatile and highly market-sensitive sector.

The outlook for cryptos may also be affected by the prospect of faster rate rises. This is because higher rates render speculative assets less desirable. The bitcoin price plummeted significantly after the Fed hiked its rates last year in 2017, and again in 2018.

5. UK GDP

UK GDP data for October will be released on Friday. This is expected to stay steady, as workers slowly return to the office and retail sales remain solid. The Bank of England may proceed with the much-debated first rate increase since the pandemic to combat spiraling inflation, according to recent economic data from the UK.

With the uncertainty created by the Omicron variant, policymakers might decide to delay raising rates until 2022. November’s surprise decision to keep rates on hold showed that policymakers are comfortable with waiting for new data.

This report was contributed by Reuters