Geoffrey Smith 

Investing.com – New data has shown that Omicron is more severe than the dominant Covid-19 strains, but it still poses a threat to many millions of Covid-19 workers. The U.S. is expected to release the latest GDP estimate in the third quarter. The U.S. will also release its latest estimate for GDP in the third quarter. Earnings from Carmax (NASDAQ) and Paychex are also due. As the holidays approach, stocks have settled into a more stable pattern and European energy markets are slowing down. This is what you should know about financial markets Wednesday 22nd December.

1. Omicron cheer

Recent evidence will show that Omicron is less dangerous than the other strains of Covid-19 that were dominant during the previous two years.

Politico claims that Omicron, the U.K. Health Security Agency, will report Wednesday night that it has confirmed that Omicron inflicts less severe illnesses than Delta. Delta was the predominant variant until recently. However, it’s also expected to warn that high case numbers could still lead to a sharp rise in hospitalizations in due course – something that has failed to materialize yet, either in the U.K. or in South Africa, where it was first detected.

In anticipation of high levels of transmission, the U.K. has shortened the time people must self-isolate to 7 days.

2. GDP revision, existing home sales data due

The last significant U.S. economic data are due to be available at 8:30 AM ET (1330 GMT), along with the most recent revisions to the third quarter gross domestic product figures.  

As previously reported, the economy experienced a sharp slowdown in quarter three. This was compared to 6.7% growth in quarter two.

Data on mortgage applications and existing home sales are also due, as is the Conference Board’s Consumer Confidence index for December.

3. Holiday mood influences stock prices. Stocks will open in mixed company. Paychex, Carmax interested

The U.S. stock exchanges are now back in pre-holiday trading mode following a dramatic burst on Tuesday of bargain-hunting.

By 6:20 AM ET (1120 GMT), were  up 51 points, or 0.1%, while were up less than 0.1% and were down by less than 0.1%.

The three major indices had posted gains of between 1.6% and 2.4% on Tuesday on confidence that the Omicron variant of Covid-19 won’t cause major economic disruption and may even herald the beginning of the end of the pandemic.

Paychex and Carmax, which both report earnings in the early hours of each day, will be among those stocks that are likely to come under scrutiny later. Voya Financial (NYSE 🙂 is also expected to focus on this news. Apple (NASDAQ:), which received a AAA rating on its first day, will be also in the spotlight.

4. European energy markets are granted temporary reprieve

Europe’s energy markets cooled off a little but remained at eye-wateringly high levels on a combination of zero incremental gas flows from Russia and low availability of nuclear power in France. Germany also plans to shut down one of its nuclear power plants by 2022.

The baseload power futures of February in France were at 1,000 euro per megawatt hour on Tuesday. Meanwhile, the total 2022 baseload German futures closed higher than 315 euros/MWh. The benchmark Dutch gas price of 180 Euros/MWh was reached on Tuesday and has only fallen to 175 euro by Wednesday.

This price increase could keep European inflation well above the Bank of England and European Central Bank expects. The study, published Tuesday by the U.K. Central Bank and Bank of England, found that U.K. household income could be affected by higher energy costs alone.

5. API draw supports oil, Libyan turmoil; EIA data eyed

Crude oil prices edged higher as a bigger-than-expected drop in U.S. inventories, as reported by the American Petroleum Institute, reassured the market of sustained solid demand in the world’s biggest consumer.

The U.S. government’s data are due out at 10:30 AM ET, as usual.

The possibility of political instability in Libya was also supported by the postponement scheduled elections for this weekend due to continuing friction between different factions. The country’s biggest oilfield El Sharara, which produces around 300,000 barrels a day, was shut in earlier this week.

At 6:30 am ET futures had risen 0.3% to $71.33, while barrel futures rose 0.1%, at $74.08/barrel.