Stocks crash as EU returns to lockdowns

Despite a very high vaccination rate, the Netherlands went into a complete lockdown on Sunday, with all but essential stores closed until at least January 14th. Additionally, the Mayor of London has warned that the city could be under lockdown soon. More EU countries will likely follow, as the motto: "vaccination is freedom" is no longer valid.

Moreover, the World Health Organization said that the number of Omicron cases is doubling in 1.5 to 3 days in areas with community transmission.

Stock markets reacted negatively, and it looks like this year, there will be no Santa Claus rally. EU bourses were down 2-3% during the London session, while US equity futures dropped 2%.

The Nasdaq 100 index declined below the critical support of September highs, canceling the medium-term uptrend. 

The US yields also crashed, with the 10-year yield falling below 1.4% and the 2-year yield dropping below 0.6%. 

On the other hand, the Fed speakers reiterated their hawkish stance, mainly due to the soaring inflation. The Fed Governor Chris Waller stated that a rate increase in March would be "very likely," while Mary Daly, president of the San Francisco Fed, said she would support two or three rate hikes next year. 

In the FX market, commodity-linked currencies fell amid risk aversion, while the EURUSD pair traded slightly higher. Gold was trying to defend the 1,800 USD threshold, while silver weakened somewhat. 

The macro calendar is empty today, likely resulting in the continuation of the current anti-risk sentiment in the markets.