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  • richard evans

Covid cases higher, markets lower

Good morning

Lord Frost has resigned from his post as Brexit negotiator which I have to say came as something of a surprise. His resignation letter suggests he was unhappy with the introduction of Plan B Covid restrictions. A rather odd thing to resign over in my opinion and a bit irresponsible given the stage talks are at. I had presumed it was because of the direction talks were taking, perhaps he was unhappy with allowing the ECJ some power, or perhaps he was for or against triggering Article 16. But no, it seemed it just came down to Covid. Anyway, Liz Truss will replace him.

On the subject of Covid, Omicron is continuing to push markets lower, a surprise cut in interest rates overnight did little to stop Asian markets falling sharply. USD is higher as you’d expect with lower risk sentiment, GBP shrugs off last weeks rate rise and GBPUSD trades back to 1.3210 while EURUSD is down to 1.1250. Talk doing the rounds that J&J and SinoPharm vaccines offer little or no protection against the variant. UK case numbers are high, over 545,000 new cases were reported in the last seven days and it is thought these numbers will continue to rise. UK government advisers think there are now hundreds of thousands of new omicron cases each day and some suggest we could see 2 million cases each day. At least our vaccination program is continuing at a good pace, but it is still too early to really know whether cases are any less severe.

However the case numbers are alarming and the speed with which Omicron spreads is also a major concern. One report suggested it was spread between two people in separate hotel rooms who had not come into contact with each other. The Netherlands announced a snap lockdown at the weekend with everything but essential stores forced to close until mid-January. Germany has said no lockdown this side of Christmas while Italy are looking at a range of restrictions. Some EU countries are not allowing travellers from the UK, but still seem happy to allow travellers from other EU members, which strikes me as a bit strange.

Overall though, difficult to see how we can remain fully open with so many cases being reported. I’m expecting a shutdown of sorts after Christmas and expect to see more countries doing the same.

In other news, Turkeys Erdogan has pledged further rate cuts, saying Islamic teaching demands low rates, while Turkey business leaders call for an end to the low rate policy that has led to so much currency and market instability. USDTRY now up at 17.50. Meanwhile Russia listed some demands aimed at diffusing tensions over Ukraine which mainly looks for NATO to rule out allowing Eastern European nations from joining the alliance. It is obviously not up to Russia to decide who can join NATO, I can’t say I trust Putin and his motives but I wonder whether he sells possible action over Ukraine as a defence over NATO aggression, albeit it made-up. Not going to help out natural gas supplies, that’s all I know.

Anyway, apologies, its all a bit doom and gloom this morning. I’ll cheer you up with some Ashes news. Ah, no lets not delve into that. However, I was pleased to see a Spurs side play over the weekend with a bit more positivity and enthusiasm in a match marred by some poor refereeing. The same could be said for my young team who finished 2021 with a draw in the league. It is very unusual for me to be upset by refereeing decisions but we had at least five major calls go against us, any of which would certainly have changed the game, including a certain penalty just being ignored. Having been a goal down, in a way I’d sometimes be happy with a draw, but in this case I really think the refereeing let the boys down. Ah well we end the first stage of the season unbeaten in all competitions, we just hope our season continues into the New Year and is not affected by Covid restrictions. Watch this space.

- 20.00 NZ Westpac consumer survey

- 00.30 RBA minutes

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