The charts that matter: omicron rattles markets

Markets were rattled by the emergence of a new strain of Covid-19. Here’s how it has affected the charts that matter most to the global economy.

Welcome back. 

This week’s cover has the omicron variant of Covid ruining everyone’s Christmas. Hopefully, it won’t come to that, of course. As Alex Rankine says, the new variant is a cause for concern, but it’s not a cause for panic – though markets certainly took its appearance as a sign to overreact a little. We look at just how serious things really are, and explain what it might mean for your money.

Our main investment feature this week is on renewable energy. Fossil fuels are on their way out (though, as we keep telling you, they’ll be around for quite some time yet, so don’t write them off). But in the longer term, renewable energy is the way to go. That’s opened up plenty of opportunities for investors, and Matthew Partridge picks some of the best.

If you’re not already a subscriber, sign up here and get your first six issues free

This week’s podcast features Ewan Markson-Brown. Ewan spent many years at Baillie Gifford running some extremely successful Pacific-focused funds, but recently moved to Crux Asset Management, where he’s moving down the market-cap scale to concentrate on smaller companies. Find out why, and what he’s buying now, here.

Here are the links for this week’s editions of Money Morning and other web articles you may have missed:

Now for the charts of the week. Gold doesn’t seem to be much of a safe haven right now, selling off in tandem with wider markets. 

© Stockcharts.com

© Stockcharts.com

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) fell back, too.

© Stockcharts.com

© Stockcharts.com

(DXY: three months)

The Chinese yuan (or renminbi) strengthened a little against the greenback (when the red line is rising, the dollar is strengthening while the yuan is weakening). 

© MoneyWeek

© MoneyWeek

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond saw a big fall despite the Federal Reserve’s more hawkish stance on inflation.

US Treasury bonds chart

US Treasury bonds chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond fell, too - though perked up towards the end of the week.

© Stockcharts.com

© Stockcharts.com

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund slid further.

© Stockcharts.com

© Stockcharts.com

(Ten-year Bund yield: three months)

Copper continued its erratic journey sideways. 

© Stockcharts.com

© Stockcharts.com

(Copper: nine months)

And the closely-related Aussie dollar fell hard against the US dollar. 

© Stockcharts.com

© Stockcharts.com

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin fell slightly, but saw little real action.

© Stockcharts.com

© Stockcharts.com

(Bitcoin: three months)

US weekly initial jobless claims rose by 28,000 to 222,000; the four-week moving average fell by 12,250 to 238,750, its lowest since 14 March 2020. 

© Federal Reserve Bank of St. Louis

© Federal Reserve Bank of St. Louis

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price saw a big fall after omicron’s emergence threatened to bring restrictions back to much of the world. But in the long run, as John noted this week, the long-term picture looks rather more optimistic.

© Stockcharts.com

© Stockcharts.com

(Brent crude oil: three months)

Amazon's share price sold off.

© Stockcharts.com

© Stockcharts.com

(Amazon: three months)

While Tesla slipped, too.

© Stockcharts.com

© Stockcharts.com

(Tesla: three months)

Have a great weekend. 

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