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The Monday after Black Friday: What to expect?

By Joseph Toppe

19:34, 26 November 2021

Illustration of coronavirus against stock market screen
Will the Omicron variant have an effect on Monday's indices? - Photo: Shutterstock

Major US indices sank across the board on Black Friday after a new Covid-19 strain was announced in South Africa, sending the Blue-Chip Dow over 900 points lower by the end of the shortened day.

At the session’s close at 1 pm EDT (UTC-5), the Dow Jones Industrial Average was 905 points lower, or 2.5%, to notch its worst day of 2021, while the S&P 500 was off by 2.3% and the Nasdaq Composite was down 2.2%.

New variant, old routine

In an interview with, Scott Baier, professor and department chair at Clemson University’s Department of Economics, said the market has experienced days like Black Friday over the last two years.

News on the Coronavirus can halt or reverse any market momentum, he continued. “If the World Health Organization declares this new strain a ‘variant of concern’, next week's market will likely be influenced.”

The WHO published a statement on the new Covid-19 strain on 26 November, stating the WHO has designated B.1.1.529 as a VOC, named Omicron.

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The cause and effect

On 25 November, the National Institute for Communicable Diseases (NICD) in South Africa announced the detection of a new variant of the SARS-COV-2, the virus that is responsible for the pandemic, following genomic sequencing.

In a note to clients, Douglas Porter, CFA, chief economist at BMO Capital Markets said, “It is far too early to draw any strong conclusions on the significance of this development. Thin holiday markets and earlier big gains meant investors were in little mood for details.”

“Yields, equities, commodity currencies, and especially oil, all were sold heavily on Friday, after mostly pushing higher earlier in the week,” he went on. “Prior to the news – which slashed rate hike expectations – global central bank tightening was more firmly in focus as inflation pressures continued to bubble.”

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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