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As of writing, there is some slight relief for global investors with the downgrading of Covid and its latest variant Omicron, although the WHO were quick to maintain a more cautious future outlook.
Asian share markets broke a five-day slide to edge higher at the close of trading on Thursday, January the 20th, but opened Friday the 21st in less optimistic mood as the Dow on Thursday made a 600-point reversal closing 313 points lower following disappointing subscription projections from Netflix and a sustained sell-off in the technology sector.
News from Chinese policymakers was the catalyst for Asia's better mood. Beset by billions of dollars of real estate indebtedness, China announced an abrupt change in policy underscored by a significant divergence of monetary and economic policy from the rest of the developed world.
Despite the welcome performance in Asia generally, geopolitical risks, notably the possibility of Russia [with Belarus] invading Ukraine, continue to weigh heavily on global stock market sentiment.
In a rare but shambolic [almost incoherent] news conference, President Joe Biden predicted late on Wednesday that 'Russia will make a move on Ukraine.'
He said a full-scale invasion would be "a disaster for Russia" but inexplicably suggested there could be a lower cost for a "minor incursion." An implication that upset Ukrainian sensibilities as it suggested that American sanctions in such an event would be commensurately less.
Russia responded by declaring Biden's remarks as 'destabilizing' and 'Provoking a Crisis' as the language gets ever more bellicose.
The U.S. Federal Reserve is determined to hike interest rates to combat inflation. Some commentators suggest a more aggressive rise than most expect. The week has witnessed technology stocks being particularly hard hit, despite Microsoft's surprise $70 billion all-cash bid for games maker Activision Blizzard @ $95 a share, which has pushed the Nasdaq down over 10% from recent highs into correction territory.
Bonds have also not escaped the carnage as U.S. Treasury yields hit two-year highs on Wednesday the 19th. Even Germany's 10-year yield moved into positive territory for the first time since May 2019. Investors wagered policymakers will curb stimulus to fight rising inflation exacerbated by 'Lockdown Inspired' supply chain disruptions.
In stark but anticipated contrast, China cut its mortgage reference rate for the first time in nearly two years. The move followed a surprise cut to the central bank's rate for one-year medium-term loans.
Chinese monetary authorities have signaled that they will take further steps to arrest slow growth in the world's second-largest economy. However, data released at the start of the week showed weakness in consumption as well as the well-flagged problems within the beleaguered property sector that continue to darken.
Many major property developers have recently been defaulting on their offshore dollar bonds. Nevertheless, given the just announced new monetary policy, the property sector soared over 5% in HK on the recent policy announcement.
Elsewhere, oil prices had touched their highest levels since 2014 on terrorist-related supply disruptions. Global benchmark Brent crude nudged at $87 a barrel at one point, with some commentators suggesting $100 a barrel shortly. Oil Futures are already at 7-year highs.
The Crypto space continued its 'Kazakhstan' induced malaise, with BTC trading around $42000. Gold crawled higher after enjoying its best session in three months, rising nearly $30 over the week to around $1,840 an ounce, while Silver traded over $24.