Results of 2021 by major assets classes

The US stock market closed the last trading day of the year with a decrease. Dow Jones index (US30) fell by 0.16% (+1.07% for the week, +4.90% for the month, +20.23% for the year), S&P 500 (US500) decreased by 0.26% (+0.68% for the week, +4.13% for the month, +28.79% for the year) and the NASDAQ Technology Index (US100) lost 0.61% (-0.33% for the week, +1.71% for the month, +23.20% for the year). For the first time since 2001, all 11 sectors of the S&P 500 index showed double-digit gains, with the S&P 500 index (US500) outperforming the NASDAQ index (US100) by year-end for the first time since 2016.

The US equity funds received significant inflows in the last ten days of December as investors welcomed signs that the Omicron coronavirus strain will not seriously impact the economy.

Today is a bank holiday in the United States and Canada.

European stock indices were mostly declining on Friday. British FTSE 100 (UK100) decreased by 0.25% (+0.58% for the week, +3.58% for the month, +13.37% for the year), German DAX (DE40) gained 0.21% (+1.43% for the week, +4.07% for the month, +15.72% for the year), Spanish IBEX 35 (ES35) jumped by 0.46% (+2.79% for the week, +4.98% for the month, +7.59% for the year), French CAC 40 (FR40) fell by 0.28% (+1.17% for the week, +5.26% for the month, +27.98% for the year). It should be noted that the Austrian stock market showed the biggest gain over the year. The Austrian ATX index has grown by 43% since the beginning of the year.

Japan plans to develop a vaccine with lifelong protection against Covid-19. The vaccine is being developed by a group of scientists from the Tokyo Institute of Medical Sciences and is based on the smallpox vaccine.

Global oil prices declined slightly on Friday but rose more than 50% in total over the year - a record increase since 2016 for Brent and since 2009 for WTI. The next meeting of the OPEC+ Ministerial Committee will be held on January 4. The baseline scenario assumes that the countries will continue to adhere to the previous agreements. The 2022 forecast assumes that with markets normalizing and supply and demand balancing, oil prices should trade at around $70 a barrel or slightly higher at $75 to $78.

Asian markets mostly traded flat on Friday. Japan's Nikkei 225 (JP225) decreased by 0.40% (-0.15% for the week, +2.72% for the month, +5.63% for the year), Hong Kong's Hang Seng (HK50) added 1.24% (+0.09% for the week, -1.55% for the month, -14.83% for the year) and Australia's S&P/ASX 200 (AU200) decreased by 0.92% (+1.08% for the week, +2.81% for the month, +11.38% for the year). China, Japan, Australia, and New Zealand have a bank holiday today.

In the commodities market futures on lumber (+38.28%), orange juice (+14.2%), WTI oil (+14. 01%), heating oil (+12.93%), Brent (+12.58%), palladium (+11.58%), soybeans (+10.06%), cocoa (+8.23%), cotton (+5.86%), corn (+4.41%), copper (+4.21%) and platinum (+4.15%) showed the biggest gain last week. Futures on natural gas (-17.67%) and coffee (-2.82%) showed the biggest fall.

By the end of the year, futures on coffee (76.02%), lumber (+59.03%), heating oil (56.78%), WTI oil (+55.5%), Brent oil (+50.45%), natural gas (+48.48%), cotton (+44.2%), copper (+26.74%), corn (+22.42%), sugar (+21.43%) and wheat (+20.26%) showed the biggest gain. Futures on palladium (-22.45%), silver (-11.57%) and platinum (-10.51%) showed the biggest drop by the end of the year.

The precious metals group showed the biggest decline at the end of the year. Over the year, gold lost 3%, silver decreased by 11.5%, platinum fell by 10.5%, and palladium lost 22.5%. This happened mainly because investors expected the US Federal Reserve to reduce the QE program. QE cuts is a policy of increasing government bond yields. Gold and silver have an inverse correlation to government bond yields, so gold had no fundamental support throughout the year. It should also be noted that gold lost its status as a safe haven asset against inflation. Moreover, investors preferred riskier assets throughout the year, because despite the reduction of the QE program, there is a lot of liquidity in the financial system, which pushes stock indices and other asset classes up.

Main market quotes:

S&P 500 (F) (US500) 4,766.18 −12.55 (−0.26%)

Dow Jones (US30) 36,338.30 −59.78 (−0.16%)

DAX (DE40) 15,884.86 +32.61 (+0.21%)

FTSE 100 (UK100) 7,384.54 −18.47 (−0.25%)

USD Index 95.67 −0.30 (−0.31%)

Important events for today:
  • - German Manufacturing PMI (m/m) at 10:55 (GMT+2);
  • - Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
  • - US Manufacturing PMI (m/m) at 16:45 (GMT+2).

by Justforex, 2022.01.03

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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