It’s been quite a week for the markets with a shock from US inflation growing faster than expected, and now we’ve got confirmation that Omicron tripped up the UK economy in December, albeit by a smaller amount than forecast.
Last night on Wall Street, US stocks took a tumble on fears that the high inflation rate could prompt the Federal Reserve to be more aggressive with its interest rate hikes.
This week’s US inflation numbers have pushed up the Vix ‘fear’ index once again, indicating that investors expect more volatile market conditions. In a nutshell that means more ups and downs with share prices.
“Ever since the pandemic struck, we’ve become accustomed to wild share price swings on the market and a 1% daily move is no longer considered a very good or bad day. It’s become part of the furniture,” says Russ Mould, investment director at AJ Bell.
“Investors have become jumpy which explains the over-reaction to any bits of good or bad news from companies. Day traders might like the volatility, but long-term investors are going to have to dial out even more noise than normal.
“In terms of company news on Friday, Tate & Lyle topped the FTSE 350 leader board, up 8% on an upbeat trading statement which sets a positive scene ahead of its imminent business restructuring. The company is selling a controlling stake in its North American sweeteners and starches business, leaving the rest of Tate & Lyle as a higher quality operation with better growth prospects.”