Global recovery has probably lost momentum with the emergence of the Omicron variant, as growth may be derailed in 2022 (and even the following year) if the threat isn’t contained, declared the OCDE, who recently lowered their global output forecasts. The rise of the new Covid variant is weighing heavily on the markets, as investors are struggling to judge its implications on the global economy. New travel restrictions are being adopted by countries around the world that are also trying to make a difference with vaccine passports, especially in Europe.
While some strategists believe that this Covid variant won’t have the same impact on the markets as the initial outbreak in March 2020, the volatility measured by the VIX in November was close to its level in January. Today, the VIX is fluctuating around a relatively high level today, which shows that market participants are nervous, and that markets may be uncertain.
Of course, with higher market volatility comes greater risks, but also greater opportunities for profit. Day traders often try to make the most of volatile periods by utilizing short term strategies, seeking to benefit from small price fluctuations. If you feel that active trading fits your investment goals and risk tolerance, utilizing a trading course could be useful step towards building your trading knowledge and improving your risk management strategy, which is essential in these volatile times.
While some experts believe that volatility will sharply increase in the upcoming months due to the uncertainty surrounding the Omicron virus’s potential impact, others, like strategists at JP Morgan, believe that the “more transmissible” but “less deadly” Omicron variant could accelerate the end of the pandemic. But even if the virus were to disappear, it wouldn’t mean a less bumpy road for the markets, as it would trigger the potential end of fiscal and monetary stimulus worldwide, which has been one of the key drivers for the last couple of years’ impressive performance of the markets.
How to be prepared for next year
Few strategists would have anticipated the impressive rally that followed the market dip of March 2020 pushing European and American stocks, as well as many other markets around the world. 2020 and 2021 were years of surprises, and 2022 may very well follow suit. Investors shouldn’t forget that some themes could have a significant impact on the markets next year, such as the tightening of monetary policies, the US midterm elections, the French presidential election, tensions in Taiwan, Turkey’s growth and the Lira’s fall, as well as supply chain bottlenecks for instance.
There are still some broad investment themes that might persist and perform well next year, like green, sustainable, biotech, communication, technology, as well as metaverse stocks. Staying on top of these investment trends won’t guarantee returns, but it will help you focus on trendy sectors that could offer great investment opportunities over time. Always remember to diversify your portfolio with investments in different currencies, assets, asset classes, as well as financial products to mitigate risks.
