The US Federal Reserve's balance sheet hits a new record. Airlines around the world cancel flights out of rising Omicron rates

The US Federal Reserve's balance sheet has reached a new record of $8.8 trillion. But it should be noted that the Fed's bond buying pace is declining now. Meanwhile, the Fed's total assets are 38% of the US GDP compared to 82% for the ECB and 133% for the Bank of England. The Fed's balance sheet growth will continue until March 2022, which will have a temporary negative impact on the dollar index, but at the same time, will be a positive factor for the growth of major US stock indices.

The US stock market ended pre-Christmas trading higher on Friday. By the end of the trading week, Dow Jones (US30) gained 0.55% (+0.42% for the week), S&P 500 (US500) added 0.62% (+1.58% for the week), NASDAQ Technology Index (US100) increased by 0.85%, and became a growth leader at the end of the week (+4.10%) among US indices.

European stock indices were mostly on the rise on Friday. The British FTSE 100 (UK100) decreased by 0.02% (+1.41% for the week), German DAX (DE40) gained 1.04% (+1.00% for the week), Spanish IBEX 35 (ES35) jumped by 1.24% (+2.86% for the week), and French CAC 40 (FR40) decreased by 0.28% but added +4.46% on the week's result among major European indices. Today is the bank holiday in most European countries, so low volatility is expected on the market.

Turkish President Tayyip Erdogan said Friday that the government had destroyed the "currency bubble" after the central bank took measures last week to protect Turkish lira deposits from volatility. Erdogan also said Turkey's economy would enter a very different environment in the summer thanks to a "new economic model" of low interest rates.

Russian Foreign Minister Lavrov threatened Europe with a big war because of Ukraine. "The course of dragging Kyiv into NATO with the prospect of the appearance of shock missile systems near our borders creates unacceptable threats to Russia's security, provoking serious military risks for all parties involved, up to a large-scale conflict in Europe," the minister warned.

In recent weeks, Oil has heavily depended on the news related to the Omicron coronavirus strain. It is now difficult to predict exactly how European authorities intend to respond to the upsurge of the disease and how severe the restrictions will be during the Christmas vacations. Today black gold prices are decreasing after airlines around the world canceled a total of about 5,900 flights starting from Dec. 24 because of the spread of COVID-19.

Gazprom has not booked any pumping capacity through the Yamal pipeline for a week now. As the company explained the day before, now it does not use this route because several customers, particularly from France and Germany, have already fully used all their annual contracted volumes and no longer put up requests for gas supplies.

Asian markets mostly traded in positive territory on Friday. Japan's Nikkei 225 (JP225) decreased by 0.06% (+1.61% for the week), Hong Kong's Hang Seng (HK50) added 0.13% (+0.62% for the week), and Australia's S&P/ASX 200 (AU200) increased by 0.44% (+1.59% for the week). Japan's retail sales rose faster than expected in November thanks to a decline in COVID-19 cases this month, which prompted buyers to increase spending on goods and services. On Friday, Japan's government approved a record $940 billion budget for the fiscal year 2022. The Bank of Japan's monetary policy is now aimed at actively stimulating the economy. China Evergrande's chairman promised to deliver thousands of apartments in December. China's real estate index increased by 2.5% on this news.

At the commodities market, palladium (+8.89%), wheat (+5.19%), fuel oil (+4.96%), soybeans (+4.45%), WTI oil (+4.3%), platinum (+4.29%), Brent oil (+3.18%), copper (+2.56%) and corn (+2.28%) futures showed the biggest gains for the last week. Lumber (-3.37%) and orange juice (-1.54%) futures showed the biggest drop.

Main market quotes:

S&P 500 (F) (US500) 4,725.79 +29.23 (+0.62%)

Dow Jones (US30) 35,950.56 +196.67 (+0.55%)

DAX (DE40) 15,756.31 +162.84 (+1.04%)

FTSE 100 (UK100) 7,372.10 −1.24 (−0.017%)

USD Index 96.06 +0.04 (+0.04%)

Important events for today:
  • - Japan Retail Sales (m/m) at 01:50 (GMT+2).

by Justforex, 2021.12.27

We advise you to get acquainted with the daily forecasts for the major currency pairs.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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