Things will probably continue as they have on Friday, the year's last trading day. Despite yesterday's amazing market pullback, there will be no important economic data.
Global financial markets are seeing some price movement following the Christmas holidays. Global stock indices rose on Thursday as investors assessed the state of the US economy and the implications of China's reopening for global growth and inflation. After a significant drop the day before, they made up all of the lost ground yesterday, with most indices gaining more than 1.5%.
Unemployment claims in the United States were slightly higher than expected on Thursday. Nonfarm payrolls, an important statistic, will be released at the end of next week. An increase in the unemployment rate typically weighs on the stock market.
In 2022's final days, investors are also thinking about what the end of China's zero COVID policy means for markets. On the one hand, the resumption of travel into and out of China may benefit the global economy as growth slows, but some are concerned that increased demand may raise travel prices again. In order to fight inflation, energy and other raw materials would force central banks to raise interest rates above what the market is currently offering. However, if Covid-19 spreads in China, it may slow production and disrupt supply chains.
Therefore, many variables that are difficult or impossible to predict have been reflected in market performance recently, with no clear direction and a high level of volatility. A lack of trading volume and less money in the market are also having an impact on the final days of 2022. As a result, the market moves more erratically and relies less on fundamental factors.
On Friday, the last trading day of the year, things will likely go the same way as they have the last few days. There won't be any important economic data, even though yesterday's amazing recovery of the markets points to another good day for the major indices.
The S&P500 index has managed to stay above the 3,800 support level for the past week, indicating further gains towards the 3,940 and 3,980 levels.
Sources: Bloomberg, Reuters