Stock markets have had a febrile month, with the biggest gainer being volatility, which leapt over the first two weeks of December.

The news of the latest omicron variant of covid-19, and quite how infectious a strain it is, broke, with unfortunate timing, over the Thanksgiving weekend and the accompanying thinner markets only exacerbated the volatility. A backdrop of yet higher inflation prints and confirmation that the Federal Reserve is likely to accelerate its pace of tapering has only added to an atmosphere of unease.

A change in the mood in some of the more heroically valued US stocks had been evident for a while now, with a number of former high-flyers coming down to earth rather sharply, and the mood is beginning to affect the broader NASDAQ. Spotify has fallen around 30% this year, while Roku and Zoom have both halved over the past six months, then there was Peleton Interactive, Twilio etc. Of course, Tesla (along with ARK Innovation) was the flag bearer for this group, they continued their strong run until early November, just possibly this bubble has also now burst under the weight of sales by Elon Musk and the stock has come back 25% from peak levels.

Most stock markets fell over the month (Shanghai and Zurich were the exceptions), with some marked under-performance from financials as long-term interest rates continued to sink, flattening yield curves, despite those inflation figures. Confirmation of the Federal Reserve’s decision on tapering is imminent, the Bank of England and the ECB will opine on inflation, tapering and base rates before the end of the week.

The US banks were led down by Citigroup with a 13% fall, but the weakness was general with JP Morgan and Goldman Sachs both down around 5%. European banks suffered too, ING Groep and Banco Santander notably, as did the Swiss banks, while in the UK, Barclays and Standard Chartered weakened around 8%. Among the insurers, Prudential was particularly weak, sinking by 15% over the month.

The price of oil came off quite sharply with the omicron news and remains down around 10% over the month. The major oil companies weakened but not as sharply, Royal Dutch Shell (now officially moving its headquarters to London) fell around 2% as did Exxon Mobil. Mining stocks were quite perverse, BHP Billiton and Rio Tinto gained, though both had had a torrid few months previously, while Barrick Gold sank 13%, reflecting a 5% fall in the price of the precious metal after November’s strength.

The technology sector saw a lot of volatility, beside the stocks mentioned above, there were two notable positives. Apple put in an extraordinary move, gaining 17% over this period and reaching new highs, incidentally getting close to a $3 trillion valuation, while another long-standing name (in tech terms) Oracle, gained 7% after excellent Q2 earnings figures. Elsewhere it was not so cheery, Salesforce sank 13% after their Q3 figures disappointed.

In a generally more difficult market, consumer staples provided some calm with gains for both Colgate-Palmolive and Procter & Gamble along with Unilever. Soft drinks featured as well as spirits, Coca-Cola and PepsiCo both gained as did Diageo. The pharmaceuticals put in a mixed performance, Pfizer gained while AstraZeneca slipped and Roche Holding were positive against a 4% fall for Sanofi.


The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.

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