Julien Ponthus: A glimpse into the days ahead

Many New Year Eve celebrations around the world had to be cancelled or scaled back due to Omicron Coronavirus. However, the financial markets held a huge party on the opening day of trading in 2022.

On Monday, the pan-European record reached a new high. Wall Street records were broken by the Dow Jones closing at historic heights.

Apple (NASDAQ) captured the excitement surrounding stocks best. It reached $3 trillion in market capitalization. That is more than all of London’s blue chip companies.

U.S. Treasury yields also surged as the optimism for the economic recovery had some investors bracing for earlier-than-expected interest rate hikes by the Federal Reserve.

Rate hike expectations were a factor in the rise of yields on U.S. 2 year notes. They have been at their highest point since March 2020, when market turmoil resulted from the pandemic.

Others asset classes enjoyed this risk-on mood as well, like oil. This rose because of the expectation that there would be more demand despite OPEC+ being set to approve another increase in output.

The consensus is that there will be no disruption to global recovery from the extraordinary wave of COVID-19-related infections and that vaccinations will eliminate the need for strict lockdowns.

This narrative is a leap in faith on Omicron’s supposed milder nature and other factors, like inflation or policy mistakes that don’t abruptly rock the boat.

It was positive Tuesday for Asian stocks, and the European and U.S. stock markets point to another session with gains.

China Evergrande shares rose as high as 10% after it was revealed that a Hainan government order to destroy 39 buildings in the resort island, Hainan had no effect on its remaining projects.

Data showing China’s factories growing at their fastest rate in six months, December, and unexpectedly increasing German sales in November may fuel more optimism.

Markets should be more informed by key developments on Tuesday

German retail sales see a rebound in November

–Switzerland, France CPI data

–UK mortgage data

–Oil prices edge higher ahead of OPEC+ output policy meeting Graphic: Apple’s soaring stock market value, https://fingfx.thomsonreuters.com/gfx/mkt/myvmnbokapr/Pasted%20image%201641236583881.png