Knee-jerk reaction to a new virus strain ruined our Friday

Friday started out looking like it was going to be another of the quiet sessions we have been seeing in recent months, at the end of each week. However, then came news of the Omicron version of the virus and the market turned into a sea of red. There was certainly an element of locking in profits as money moved to the sidelines, but where to from here? Has this just been a gut reaction that will settle down over the next few days?

The 13% drop in the oil price was a good example of the reversal of speculative money flows. Any stock or commodity price that has recently been pushed higher will always be the most vulnerable when markets react like this.

In Australia, we had the first taste of the panic and this accelerated overnight in Europe and the US, but will the weekend give us time to pause and think. This is more likely to be an event along the path rather than any significant turning event, but time will tell. Markets around the globe will look to trading sessions in prior time zones for guidance as to which way to head.

Virus aside, Inflation and interest rate oscillations dominated markets last week with the gold price being a casualty, yet the mining index was stronger because of a spike in the iron ore price. Swings and roundabouts come to mind when trying to identify trends at present. When considering gold investments, you should be looking at a sustainable gold price as opposed to riding the wave of the next push higher. You should also be looking at companies with new or expanding production as opposed to those that are steady state.
 

 WeeklyComm27November2021.pdf