Geoffrey Smith 

Investing.com – Technology stocks could be subject to fresh sales as the world struggles with the imminent end of the free flow of money from central banks. China has imposed its first Omicron-related restriction, and data from South Africa gives more reasons to be optimistic about the relative mildness the new Covid-19 variant. German business is even darker despite hints of brighter days ahead, while Japan’s Bank of Japan continues to be more cautious than the European Central Bank in tightening the market. What you should know on Friday, 17 December in the financial markets

1. Technology under Pressure 

Technology stocks could see their Thursday losses grow as the global tightening of monetary policies will bring an end to the era when there was no money to bet on long-duration growth prospects.

It fell by 2.5% Thursday. This was the second day of more than 2 % daily drops this month.

Apple stock declined 3.9% and premarket was off 1.8%. Tesla stock fell 1.6% (NASDAQ:).

The Nasdaq’s March 2020 level, which was the beginning of the pandemic, has more than doubled. At 6:35 AM ET (1235 GMT), they had fallen 0.7% and 0.1% respectively, but were still down 0.3%.

2. China begins to take Omicron seriously

To stop the Omicron-Covid-19 variant spreading, countries around the globe continued to implement public health measures. The Chinese region of Guangdong, including its capital Guangzhou introduced its first – albeit localized – restrictions on movement, while Italy angered other EU member states with fresh testing requirements on those arriving from abroad.

South Africa was the first to recognize the Omicron variant. There were better results. The latest data shows that hospitalization rates have fallen significantly from those of previous waves.  Health experts warn against extrapolating too heavily from South African data because of the youth skew and greater vaccination coverage since the last Covid Wave.

Europe was witnessing the first indication that the governments of Europe will need to open the fiscal support taps in order to mitigate the effects of the new surge. Sweden announced that it would resume payments to support businesses affected by sharp drops in consumer demand.

3. BoJ signals modest tightening ahead; Russia, Mexico hike & Colombia is next up

Overnight, the global tightening of monetary policies continued. The Bank of Japan announced that it would stop buying corporate bonds and commercial papers in March.

As tightening steps go, that’s on a par with the European Central Bank’s promise to dial down quantitative easing from March 2022 onwards. It’s not possible to see either central bank increasing interest rates for next year.

The Central Bank of Russia, however, raised its key rate by 100 basis points to 8.5%. It follows increases in interest rates in Norway, Mexico, and the U.K. that took place on Thursday. These were all hawkish surprise moves. Colombia expects to increase its key rate by 0.5% in the future.

4. German Gloom Deepens Despite Inflation Peaking Signs

The gloom continues to deepen in Europe’s largest economy: German business expectations, as measured by the Ifo Business Climate index, fell for a fifth straight month in December as the services sector was hit by the latest wave of Covid-19. Current conditions were included in the main index. It fell to its lowest level since March.

However, there were signs that things could be changing. German producer prices rose by only 0.8% in November, the smallest rise in eight months, while car sales in both Germany and around Europe picked up from October’s disaster, suggesting that the worst of the industry’s supply chain problems may be behind it.

Eurozone inflation also turned out weaker in month-on-month terms than expected: the core rate was flat while the headline rate rose ‘only’ 0.4%, due largely to surging energy prices.

5. Oil is still suffering from fears about demand

The fear that increasing restrictions to mobility will lead to a decrease in demand and a rising fear about infection caused the crude oil price drop.

Futures fell 1.8% to $71.09 per barrel by 6:30 AM ET. They were also down 1.7% to $73.72 per barrel. This was unimpressed with a Goldman Sachs forecast that oil prices would reach $100 this year, as global demand recovers from a record high.

The International Energy Agency made a harsh assessment of the global economy’s dependence on fossil fuels. It noted that this year, there was an increase in the use of dirty coal to generate electricity. This is primarily due to the increased output from China and India.