May 22, 2022

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They fear this now

They fear this now

The omikron variant really made its way into Norway after it was discovered in South Africa on November 23. After a period of high infection rates, infection rates in Norway appear to be declining. That’s after the government imposed strict restrictions earlier this month.

characterize the economy

However, the uncertainty surrounding the virus is affecting the global economy. Several thousand flights canceled over the Christmas holidaysStock markets fluctuated greatly. Ahead of the weekend, Wall Street closed at a record high, but many fear a major correction is around the corner, if Omicron is indeed creating problems for global industries.

So excitement – and nervousness – are great for how the markets will develop into and beyond the new year.

It is clear that Omicron will lead to poor economic development in the coming months. Most countries in Europe have introduced stricter restrictions, which go beyond restaurants and tourism, Nordea Markets chief strategist Eric Bruce tells Bursen.

The biggest concern

He also points to the fear of Omicron in the population, and the wave of infections on the rise in the United States, as disruptions to the global economy.

in a The “perfect storm” of a series of unfortunate eventsBesides the pandemic that has caused huge waves in the global economy, it has also led to huge shortages of merchandise and massive transportation problems.

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The biggest concern is whether we will see an infection in Asia, and that it could exacerbate the problems we have with delivery, closing businesses and ports. It could exacerbate the problems we already have, Bruce says, and lead to more price pressure.

Don’t believe in backtracking

However, the economist does not see the entire market outlook in the future.

– I don’t think we will see a sharp decline in the market, because corporate earnings through the pandemic in general have been good. The business community in general has made good profits.

He believes the market will revise that normalization after the pandemic is postponed, and he believes profits will return.

Nervous and volatile

Kari Due-Andresen, chief economist and head of analysis at Akershus Eiendom, describes the market as “strained and volatile.”

We saw very significant impacts during the trading day. Market participants seem to be ahead in terms of how omikron will affect the economy around the world. We don’t know that yet, Deo Anderson tells Bursen.

She thinks we’ll have an answer in the next few weeks about how long it will take, before we’re in a more normal position.

– A survey among international investors showed that inflation was the biggest concern, then there was the epidemic, and then the US central bank had to tighten too much. All of these are legitimate concerns, says Deo Andersen.

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The economist notes that the stock market has recently recovered very quickly, long before most people imagined.

– Then we get a new “setback”. The question now is how much upside is left. This is making you a little hesitant now. The fact that the prices are already very high, makes the players in the market nervous.

– The biggest fear

Bruce points to inflation as a challenge. On December 17, the US Department of Labor announced that inflation in November was 6.8% – the highest growth rate in nearly 40 years.

The US Federal Reserve is now in the process of phasing out crisis measures and has announced several rate hikes next year. Economists believe the worst of inflation will be over by 2022, according to the NTB.

We see very gradual tightening in the US and UK. Central banks have accepted inflation and they are tightening, but it won’t be more than we can tolerate, I think, says Bruce.

Investors’ biggest fear is that central banks will be left behind and must tighten quickly to bring down inflation, he adds.

Bruce doesn’t think stock markets will do as well in the future as they did this year.

You probably can’t count on the solid growth you’ve had this year. You’ll likely see days of pullbacks quite often, not a steady rally as we’ve seen this year. But the outlook for the market in general is good.