ECONOMIC AND MARKET OVERVIEW
Global
The last few months of 2021 seem to have ended in a similar fashion to the last two months of 2020 on the back of a big wave.
This is not the type of wave that most holiday makers in the Southern Hemisphere look forward to as the year draws to a close, but rather the spike in Covid-19 infections that can be attributed to the Omicron variant. This Covid mutation grabbed the late headlines in November, and in so doing gave markets a fright. With ongoing concerns over inflation and the pace of monetary policy tightening already weighing on investors’ minds, the sudden news of this apparently contagious new Covid variant and the immediate travel restrictions evoked parallels to the first lockdowns of March 2020 and brought selling pressure to bear on risk assets.
The chart below shows the rolling 7 day average of new cases (per million people to aid comparison across countries with varying population) in a small sample of countries since the onset of the pandemic. As mentioned earlier, risk markets suffered a sell off on Friday 26 November as news of an outbreak of the latest variant permeated global headlines. This comes at a time of rising cases, notably in Europe where restrictions had already started to increase, along with spikes in the case count in Austria, Netherlands and Germany.
