US Indices

Name of the index Friday’s close Net Change Net Change (%)
Dow Jones Industrial (US 30) 36,338.30 35.92 0.10%
Nasdaq (US Tech 100) 16,320.08 -247.42 -1.49%
S&P 500 (US 500) 4,766.18 -25.01 -0.52%

Source: Bloomberg

Stocks ended the final trading session of 2021 on a downward note, but still capped off a record-setting year despite the continuing headwinds of the global pandemic.

The S&P 500 was the stand-out index in 2021 — it posted a 26.9% gain for the year, or a total return of 28.7% including dividends. Meanwhile, the Dow Jones gained a comparatively lower rate of 18.7%, and the tech-powered Nasdaq Composite climbed 21.4%. The year 2021 marked the sixth historical year that the S&P 500 outperformed its two counterparts.

Home Depot (HD) and Nike (NKE) were amongst the top winners on the Dow Jones, each gaining more than 1%. On the downside, airline stocks experienced yet another turbulent week. American Airlines pulled back over 2.5%, whilst United Airlines dived 1.9%. Boeing (BA) led losses on the Dow, posting a 1.2% decline.

High-growth tech stocks also retreated as the 10-year US treasury yield rose above 1.5%. Meanwhile, investors continued to monitor developments related to the Omicron variant.

Despite ongoing inflationary pressures and warnings of an ‘overheating’ stock market, investors are still expecting a boost from the ‘January effect’, referring to a seasonal trend positing that the market’s best month tends to be the year’s first.

As Facebook parent Meta, Apple, Microsoft, and Google prepare to release new hardware products and software services in places that were previously a niche market for early adopters, the year 2022 is set to be the biggest year yet for the Metaverse. Leading tech companies are confident that devices that transport users to expanded or imaginary worlds will open up the biggest new market for software since Apple introduced the touchscreen smartphone in 2007.


Forex Chart Deriv Market Report 3 Jan 2022

Source: Bloomberg

The US Dollar Index (USDX), which measures the value of the US dollar in relation to a basket of currencies, fell on Friday during quiet holiday shopping. However, it did end 2021 with a gain of nearly 7% as the US investors are betting the Federal Reserve will raise rates sooner than most other major economies amid rising inflation brought about by Covid-19 stimulus initiatives.

The Canadian dollar, which performed around flat against the dollar in 2021, was the best performer, helped by expectations that the Bank of Canada would begin tightening its monetary policy as soon as January. The worst performer against the majors was the Japanese yen, which is down around 10% this year.

Despite the euro reaching a seven-week high of around a $1.1365 level against the US dollar on the last day of 2021, the EUR/USD registered a dull start to 2022, falling approximately 0.20% intraday around $1.1340. While mixed concerns ruled the day, the market’s consolidation at the year’s first sluggish session led to a slight correction of the quote.

Above all, the Fed’s monetary policy divergence from the ECB’s will be key to watch in the year 2022 as the Fed is likely moving faster than the ECB towards a tighter monetary policy, which could weigh on EUR/USD prices.

As a result, Wednesday’s Federal Open Market Committee (FOMC) Meeting Minutes and Friday’s US Nonfarm Payrolls (NFP) will be crucial for the pair traders.

The pair is currently trading above its support at the 23.6% retracement level of $1.13142 and below its resistance at the 38.2% retracement level of $1.13850.


Commodities Chart Deriv Market Report 3 Jan 2022

Source: Bloomberg

The year-end flows favoured gold against the US dollar (XAU/USD) for the week. This is due to the absence of major market moving news, negative reactions on the Wall Street indices, a pullback in the US dollar index, and the escalation of Omicron cases around the world. This new variant could trigger a continuous flight to safety in 2022, which will increase demand for risk-free government bonds and lower yields, alongside raising gold prices. Gold against the US dollar traded just under $1,830 and is trading close to the resistance level near $1,839 at 61.8% retracement level. The support level is around $1,765-$1,780 at 50% retracement level. 

Gold against euro (XAU/EUR) reached new highs for the first time since December 26, with bids hovering around €1,608 in the early European morning on Friday. As a result, yellow metal prices in euro have risen for the second day in a row, continuing a significant increase seen on Thursday. In addition, the recent fall in EUR/USD amid Omicron concerns, the strength of US retail data, and the suspension of German 10-Year Treasury yields near the monthly highs could have contributed to the strength of the XAU/EUR. However, the record surge in daily French Covid infections and the 45% increase in monthly viral hospitalisations pose a challenge for XAU/EUR buyers.

In the energy markets, oil prices fell for the first time in eight days, with WTI crude falling $1.78 (2.3%) to $75.21 a barrel. Natural gas prices rose 46% in 2021, the highest year since 2016. OPEC + will hold a meeting on 4 January 2022, and will probably stick to their plan of adding 400,000 barrels per day of supply in February.


Crypto Chart Deriv Market Report 3 Jan 2022

Source: Bloomberg

Bitcoin traded close to the $47,000 mark during the year-end holidays on lower volumes than usual. Opening on Monday above the $51,000 mark, the world’s largest crypto coin gave up steep losses during the week, shedding over 10% by Thursday to trade around lows of $46,250.

Bitcoin closed out December with a 19% drop, its largest monthly loss since May. The year 2021 has proven to be one of Bitcoin’s slowest with a yearly advance of 59%, the slowest since 2015 when it gained only 36%.

Ethereum in comparison gained around 380% in 2021, whilst Binance coin, the number three cryptocurrency by market capitalisation, soared over 1000% in value.

Looking into 2022, Arcane Research, a blockchain research firm made a number of predictions for the crypto market. Amongst them, Ethereum is expected to yet again outperform Bitcoin in 2022. According to Arcane Research, the expected surge in NFT sales volumes whose tokens mostly still run on the Ethereum blockchain will be a major driver. 

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