The Triple Whammy - Weekly Market Update - YouTube

Welcome to the GAiM Plan podcast, the show that helps you grow wealth, create passive income and achieve your financial goals faster.

I am your host Damodhar Mata, author, blogger, and Financial Advisor in Dubai.

This is the weekly market update as of 19th December 2021. Tune in every week for news, views, and market moves.

In this episode, we will discuss the triple whammy that brought the markets down last week.

We will learn a new phrase, "Quadruple Witching," and discuss the following year's outlook.

Let me begin today's episode by wishing all those celebrating Christmas later this week, A Merry Christmas and a Happy New Year!

Despite the relaxed mood of the holiday season, there was sustained selling pressure in the global markets last week due to the Triple Whammy of;

The Quadruple Witching The Omicron Threat and The Fed U-Turn

What is Quadruple Witching?

Quadruple witching is a spooky big word referring to the simultaneous expiry of four types of financial contracts:

Stock index futures, Stock index options, Stock options, and single stock futures.

It happens every quarter, on the third Friday of March, June, September, and December. On this day, typically, the trading volumes are very high as traders square off their positions.

While this term usually means a lot to traders, it is of little significance to investors.

However, last week, the quadruple witching coincided with Fed's 180º shift and the Omicron threat, further exacerbating market volatility.

The Fed made a complete U-turn in the last two weeks to classify US inflation as not transitionary

After Wednesday's meeting, Cheif Jerome Powell announced that the Fed would push the pedal on tapering, ending the bond purchases by March next year

He also indicated three potential interest rate hikes in 2022 in an attempt to curb inflation.

The third reason for the sell-off last week was the Omicron variant threat, spreading swiftly while the Delta variant is still active.

The coincidence of these two variants could spike the number of cases globally in January, warranting further social restrictions and market volatility.

Traders and Institutional investors sold in response to the triple whammy to lock in the spectacular profits earned during the year.

Moving on to Europe European equities were down last week amidst tightened social restrictions and fears of stringent monetary policies.

In an attempt to curb inflation, the Bank of England raised interest rates for the first time in more than three years.

On the other hand, the European Central Bank(ECB) left its monetary policy unchanged, at least for now.

However, it indicated that the transition from the ultra-easy monetary policy is inevitable but gradual.

Moving further East into India and China China

Chinese equities were down due to the resurgence of Covid 19 cases, export restrictions by the US, and delisting fears.

India Shares in India were down on weak global cues and sustained FII selling throughout the last three months.

After a steep rally last week, investors and institutions booked profits amidst the triple whammy discussed above.

However, the expert outlook for the year-end and the following year is still positive.

Prudent asset allocation in value stocks, defensive sectors, bonds, gold, and cash can provide the necessary cushion to withstand potential volatilities.

This was a weekly market update as of 19th December 2021. I hope you found it valuable and engaging.

I have now completed 19 weeks of market updates, including today. How do you feel about this?

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I am your host Damodhar Mata, until next week; stay safe and stay invested.