UK markets would need more credible data to glide further

The UK markets have been swaying to the mood of the global markets, while the US markets are more inclined towards the earnings now; the UK had its share of economic data to guide the path. The November GDP data of 0.9 per cent showed that GDP was in a better position than the pre-pandemic levels, and that will help markets to firm up this week. There has been a continuous decline in Covid cases. Also, UK Health Security Agency’s latest risk assessment showing Omicron relatively mild for most adults would boost the morale.
Though it might be too early to say that the Omicron wave has reached its peak, and investors would need firm and more reliable data to put their bets on, till then selling may continue. M&A space is abuzz with GSK’s dismissal of Unilever’s bid for its consumer healthcare venture. GSK has reiterated its commitment to separate the business from its medical arm and float it on the London Stock Exchange. Unilever has expressed its willingness for further dialogue, but whatever decision GSK takes, it will be a win-win situation for the shareholders as the company is obliged to hand over the best value either by sale or demerger.
The traders not only in the UK but across the globe are concerned about the rapid increase in the US treasury yield, with investors dumping government bonds. The recent swings in the US treasury have led to volatility in the global financial markets. Jerome Powell’s statement might have soothed the nerve momentarily, but traders are bracing up for the start of a tighter monetary policy regime, most likely from March 2022. After Fed’s policy decision on January 25-26, all eyes will be focused on the Bank of England’s (BoE) decision on February 3. Now there is an increased fifty-fifty per cent chance of a rate hike in February. If the Office for National Statistics, before that comes up with similar to US data of consumer prices for the period year to December, the rate hike chances will firm up and that is something which can keep the markets cautious.