Wall Street finished well ahead and UK shares are in positive territory on Friday. Our head of markets brings us up to speed and looks at today's big events.
Markets have regained some poise at the end of a difficult week which was marred by Omicron fears and an increasingly hawkish outlook from central banks.
Investors switched into optimistic mode following the earlier Federal Reserve suggestion that the end of the tapering programme, and therefore the beginning of interest rate hikes, could come earlier than expected next year. Alongside no immediate change to its supply plans at OPEC, there is a growing feeling that future variants may not, after all, be enough to derail economic policy per se.
Even so, the volatility index remains elevated in anticipation of further details on the variant, while the oil price has continued to whipsaw on unclear demand in the coming months. Despite the latest bout of volatility, oil remains up by 37% in the year to date, although some way off its more recent highs.
The next indication on the strength of the US economy will come in the form on the non-farm payrolls figure later. After than a stronger than expected reading of 531,000 jobs being added in October, the expectations for the November outturn is a figure of 550,000. As ever, a stronger reading would tend to add weight to any Federal Reserve decision to accelerate tapering, while a lower figure would once more muddy the waters.
- Why I’m buying ‘value’ stocks and other top tips
- Ian Heslop's outlook for the US stock market in 2022
- Bill Ackman: hot sectors and the economy in 2022
- Want to buy and sell international shares? It’s easy to do. Here’s how
Despite the volatility, the performance of the main indices remains in rude health, with the Dow Jones having added 13.2% in the year to date, the S&P500 21.9% and the Nasdaq 19.3%.
Asian markets were rather more subdued overnight, as the announcement that the ride-hailing company Didi would delist from New York reignited concerns on both the fractious relationship between the US and China, as well as the general spectre of tech regulation.
UK markets were prepared to take their lead from Wall Street, however, with a break in hostilities signalling a stronger open.
There was some strength in oil stocks on the back of the oil price rebound and banks on a general move towards more cyclical sectors. There was also some respite for airline and airline-related stocks. Although restrictions have been tightened, travel remains possible and there will be an element of tourists who will stick with their plans.
Wider concerns remain as to whether the airlines will bear the brunt of future reactions to mutations and variants, although for now investors are looking ahead to what should prove to be a busy summer period regardless.
- IAG and easyJet fly high on a good day for airline stocks
- Friends & Family: ii customers can give up to 5 people a free subscription to ii, for just £5 a month extra. Learn more
Volatility is likely to remain in place for the remainder of the year, with regular switches between the risk-on and risk-off trade as further news emerges. In the meantime, the UK indices are holding on to their creditable gains11, with the FTSE100 ahead by 11.2% and the FTSE250 by 11.4% in the year to date.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.