Today marks the end of a very exciting week for the financial markets.
Central banks have stayed in the spotlight all week, and today is no exception. This time it was the Bank of Japan’s turn to be in focus. The regulator chose to act similarly to the Federal Reserve and the European Central Bank, announcing an end to its bond-buying program in March 2022. Aside from that, all of its other policies will remain loose and accommodative while Japan is recovering from the coronavirus pandemic.
Due to the general trend of monetary policy tightening around the globe (the Fed, Bank of England, ECB, Bank of Japan, and more), stock indices are moving down at the prospect of less stimulus.
Tech stocks, in particular, which shone during the worst waves of the coronavirus pandemic, are losing quite a bit of value as investors are in a hurry to sell at the current high prices. This trend has affected the likes of Apple, Tesla, Nvidia, and more.
Meanwhile, the coronavirus pandemic continues to be an important topic for market participants. The reports from South Africa, the first country to identify Omicron, continue pouring in, showing consistently low hospitalization rates compared to previous outbreaks.
However, the South African health authorities also stressed that the population is vaccinated at a very high percentage and its average age is lower than many other countries’. Thus, the population of South Africa is more resilient to the virus as a whole, which can partially explain the lower hospitalization rate.
Though people remain optimistic about Omicron being a milder strain of Covid-19, things might not be as rosy if it causes an outbreak in populations with a lower vaccination rate and more elderly people.
China, which saw its first Omicron patient about a week ago, is already implementing restrictions, putting the entire Guangdong in a lockdown to limit the spread of the virus.
We might see lockdowns in Europe soon as well. Countries like Italy have already toughened their policies regarding arrivals from abroad, likely limiting tourism over the winter holidays.
