The news shaping the markets today

South Korea recorded a trade deficit of $0.59 billion in December, versus a surplus of $6.69 billion in the year-ago month, exerting pressure on the KRW/USD forex pair.

Singapore’s economy grew 5.9% year-over-year in the fourth quarter, compared to a 7.1% expansion in the prior quarter. The slowdown in growth sent the SGD/USD pair lower in forex trading this morning.

Malaysia’s IHS Markit manufacturing PMI rose to 52.8 in December, from 52.3 a month ago. However, the MYR/USD forex pair remained under pressure.

Ireland’s manufacturing PMI fell to a nine-month low of 58.3 in December, from 59.9 in the previous month, sending the EUR/USD pair lower in forex trading this morning.

The Philippines reported an improvement in its manufacturing PMI to 51.8 in December, from 51.7 a month ago. However, the PHP/USD forex pair remained flat after the news.

What’s happening: US stocks closed lower on the last trading session of the year but exited the year with gains.

What happened: Wall Street stocks ended December in the black, with the Dow Jones index recording gains for the fifth straight month.

All three major indices notched double-digit gains in 2021, despite persistent concerns surrounding the covid-19 pandemic.

Why it matters: The major US indices fell modestly amid light trading on Friday as investors were looking to close their books for the year.

The total volume traded on US equity exchanges was just north of 7 billion shares on the last trading day of the year, which marked the slowest session of 2021. The 30-stock benchmark index fell 0.16% to close at 36,338.30 on Friday, while the S&P 500 lost 0.26% to reach 4,766.18. The Nasdaq 100 settled at 16,320.08, down 0.66%.

However, the S&P 500 settled the month 4.4% higher and the year with a 26.9% jump. The index notched 70 record-high settlements in 2021, gaining for the third straight year.

The Dow Jones index jumped 18.7% last year, while the Nasdaq added 21.4%. Investor risk appetite remained largely elevated due to the rebound in the global economy even though several countries were hit by the Delta and Omicron variants of covid-19 in the year. Sentiment was also supported by actions of the Federal Reserve and upbeat earnings posted by US companies.

All major sectors moved higher in 2021 with energy stocks recording the biggest gains. The 47.7% surge in the energy sector represented the highest annual gains on record. The utilities sector ended the year with the lowest gains, still up 14%.

Devon Energy was the best performing stock on the S&P 500 index last year, while Microsoft and Home Depot were the highest gainers on the Dow Jones index.

What to watch: Investors await economic data on manufacturing PMI and construction spending from the US today. The IHS Markit manufacturing PMI is expected to decline to 57.8 in December, from 58.3 in the previous month, while construction spending is projected to grow 0.6% in November, following a 0.2% increase in October.

Rising covid-19 cases remains a major concern for markets, with total global infections surpassing 290 million.

The markets today

Bitcoin will be in focus today after notching solid gains last year.

Context: The largest cryptocurrency by market value surged to record highs during 2021, but closed December in the red.

Details: Bitcoin remained highly volatile through 2021 and particularly in December. The crypto king closed the month with a declined of around 19%, which was its biggest monthly decline since May.

Bitcoin jumped to a record high in April last year but could not hold gains and fell sharply below the $50,000 level by yearend.

The launch of a bitcoin futures ETF on the NYSE helped the cryptocurrency climb to above $66,000 in October. Tweets from Tesla CEO Elon Musk also caused significant volatility in the crypto markets in 2021.

China’s crackdown on mining of cryptocurrencies and increased regulatory action from the US and Europe weighed on bitcoin, while the opening of millions of new accounts by retail traders helped the crypto.

Although bitcoin fell around 19% in December, it ended 2021 with gains of approximately 60%. Bitcoin’s closest rival, Ethereum, jumped around 450% last year. The third-largest cryptocurrency by market capitalization, Binance, added a whopping 1,340% in the year.

What to watch: Traders are bullish about a strong start to 2022 in the crypto market, with some experts suggesting historical highs in the first week of January.

Bitcoin had recorded positive returns in the first week of January 2021, surging from $28,653 to $41,441. Analysts on average expect Ethereum to pose tough competition to bitcoin in 2022.

Other Markets: European trading indices closed lower on Friday, with the FTSE 100, CAC 40 and STOXX Europe 600 down by 0.25%, 0.28% and 0.19%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Turkey’s consumer price index, producer price inflation and manufacturing PMI, Spain’s manufacturing PMI and new car sales, Italy’s manufacturing PMI, France’s manufacturing PMI, Germany’s manufacturing PMI, Eurozone’s manufacturing PMI, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s foreign exchange reserves and manufacturing PMI, Central Bank of Brazil’s focus market readout, India’s balance of trade, imports and exports, Brazil’s manufacturing PMI and balance of trade, as well as Argentina’s tax revenue.

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