Macro Roundup (Dec 22)

SHANGHAI, Dec 22 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar gained against most currencies on Monday in a choppy, holiday-shortened week, as a fast-spreading new coronavirus strain prevalent in Britain prompted investors to seek safety in the greenback.

The new Covid mutation in the U.K. has resulted in a tough lockdown in London and other parts of southeast England and a U-turn on the mixing of households over the Christmas break.

The variant is thought to be up to 70% more transmissible than the original strain of the disease. The World Health Organization said it has so far been identified in Denmark, the Netherlands and Australia.

It has led to several countries in Europe and elsewhere to block travel from Britain. France, Germany, Italy, Ireland and the Netherlands all barred flights from the U.K., as have Canada and Israel.

On Wall Street, during Monday’s regular market hours, stocks opened sharply lower amid concerns about a new variant of Covid-19 in the United Kingdom. Many European countries implemented travel restrictions on visitors from the U.K., and New York Gov. Andrew Cuomo called for the United States to take similar steps.

However, many experts, including those from the World Health Organization, said on Monday that the coronavirus vaccines from Pfizer and Moderna would likely be effective against the new variant and that Covid was mutating at a slower pace than the seasonal flu.

The Dow finished with a gain of 37 points, thanks in part to a strong performance bank stocks. The S&P 500, Nasdaq Composite and stocks tied to the travel industry finished well off their session lows.

Oil prices tumbled more than 2% on Monday as a fast-spreading new coronavirus strain that has shut down much of Britain and led to tighter restrictions in Europe sparked worries about a slower recovery in fuel demand.

Brent crude was down $1.85, or 3.5%, at $50.41 a barrel. West Texas Intermediate (WTI) crude for delivery in January fell $1.36, or 2.77%, to settle at $47.74 per barrel.

The more active February WTI contract fell $1.83, or 3.7%, to $47.41 a barrel.

Both contracts had lost as much as $3 earlier in the session, their biggest daily drop in six months.

“Reports of a new strain of the coronavirus has weighed on risk sentiment and oil. New mobility restrictions across Europe are also not helping as European oil demand will suffer,” said UBS oil analyst Giovanni Staunovo.

“Investors need to be mindful that the road to higher oil demand and prices will remain bumpy.”

Gold edged down on Monday as fears of a new coronavirus strain roiled markets and investors opted for the dollar, while the metal gained some support from a U.S. stimulus package.

Spot gold fell 0.2% to $1,877.83 per ounce, having earlier hit its highest since Nov. 9 at $1,906.46. U.S. gold futures settled down 0.3% at $1,882.80.

“Gold market traders in general are looking at the Senate in the U.S. and it is a foregone conclusion that this stimulus deal that went through last night is going to pass this afternoon,” said Bob Haberkorn, senior market strategist at RJO Futures.

“Gold will trade higher as the week goes on, but today I think traders are getting their heads around the UK strain.”

On the economic data front, investors will receive new readings on consumer confidence and existing home sales on Tuesday.