Global Markets Newsletter – January 2022

The New Year kicked off with high markets volatil-ity due to inflationary concerns, geopolitical issues in the Russian-Ukraine area and high energy pric-es. Central banks are eager to rise rates, to combat increased inflation. Indeed, FOMC (the Federal Open Market Committee), at its January meeting, kept policy on hold, but – as expected – the Com-mittee indicated that a rise in the federal funds rate would be appropriate soon, likely in March.

Its assessment on the economic outlook remained broadly unchanged, with the Fed referring to in-flation ‘well above’ its 2% target, and the strong labour market as driving the need for a near-term policy tightening.

The Committee acknowledged the rise in covid-19 cases as currently dampening activity in the pan-demic-sensitive sectors (travel and restaurants).

In the USA, GDP growth for the fourth quarter was announced at 6.9% from 2.3%. Exports grew marginally by $600mln to $224.6bln, while im-ports increased substantially by $14.7bln to $304.4bln with a negative trade balance at $80,2bln. Unemployment remains low at a new record level at 3.9% for last December (from 4.2%), while inflation climbs at 7% (from 6.8%). Retail sales dropped to 16.95%, and industrial production to 3.67%.

In Europe, stocks moved sideways with lower vola-tility vs. the US stock market. In the eurozone, GDP for 2021, was announced at 4.6% (3.9%), while the last quarter was enhanced only by 0.3%. Inflation was announced at 5% (4.9%), retail sales were up by 7.8% (1.7%), while unemployment marginally dropped to 7.2%. Industrial produc-tion climbed to -2.3% (1.3).

In Greece, stock market moved well above 900 to 957 units. The issue of the new 10-year govern-ment bond was successful, but the yield was an-nounced at 1.84% showing inflationary pressures, as the last issue of this tenor was at 0.81%.

The EUR/USD hovered around 1.11 and expected to continue towards 1.10 in the first half of 2022, depending on interest rates policy.

Investments Preference remains in US stocks, with available liquidity to accommodate buying oppor-tunities within corrective moves.

S&P-500 (1 year graph)
EuroStoxx-50 (1 year graph)
EUR/USD  (1 year graph)

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