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Be aware: Covid's new variant - Omicron BF.7, may negatively affect the stock markets.
As per the recent updates, the new variant of Covid-Omicron BF.7, which is rapidly increasing in China, South Korea, Japan, and the United States, is most likely to affect the markets negatively. In the year 2020, the world economy was negatively impacted by the first wave of the COVID pandemic: increased inflation, increased unemployment, and income mismanagement caused a decline in organizational growth rate, resulting in negative GDP for major countries around the world. To fight with such a situation, governments take some precautionary actions to save their economies by decreasing interest rates and providing relief packages for corporations as well as for the general public.
Current Situation
Now, the situations are different: people in the different countries are not in a position to face any further lockdowns, and governments are also not in a position to provide any further relief packages along with a reduction in interest rates.
The Federal Reserve and the central banks of different countries around the world are in action mode and increasing the interest rate to keep their economies on track, (click here) has directly linked with loan EMIs, hence increased burden of cost of living, which has a direct impact on savings, resulting in less investment flow in the markets.
Stock Market Sentiments
The stock market may continue to be close to its lows for the majority of the day due to the fear of an increased cost of capital for companies and a decreasing demand in the market. All the major indices in the world fall: the Dow Jones nearly falls around 1300 points (4.1%), the Nasdaq falls around 650 points (5.7%), the BSE Sensex falls around 1400 points (2.25%), and the DAX falls around 530 points (3.7%).
Investors are in fear of an economic slowdown as the purchasing power of consumers will decrease and the future earnings of companies will not be as per expected benchmarks.
All the major crypto currencies (Bitcoin, Ethereum, Cardano, etc.) fell nearly 5% to 13%. Since Bitcoin reached its all-time high last year at around $80,000 USD, it has now reached around $16,500 USD; the same is happening with all the other major crypto currencies. Previously, there were no regulations on the crypto market, but some countries have taken initiatives to regulate the crypto market in their countries as of the start of the calendar year 2022, which is also the biggest reason for the continued decline of the crypto market.
It may be good news for the bullion market
As per the current pandemic and economic situations, along with the uncertain fear of investors, they are most likely to move towards the safer side, and the government also wants to make their reserves better to safeguard their countries’ economies and be ready to fight with the new variant of COVID, Omicron BF.7. Governments also take care to control rising inflation rates; thus, central banks may be unable to lower interest rates, which directly benefited the bullion market and keeps it bullish. The prices of gold and silver increased around 5% within a month, and that sentiment is expected to continue.
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