After a mid-week wobble, US sharemarkets recovered on hopes that measures announced by the world’s most influential central bank, the Federal Reserve, can bring inflation under control without stifling the economic recovery.

Despite resilience in the early part of the week, the ASX200 could not build on last week’s gains, straining under the weight of surging COVID-19 cases in New South Wales and Victoria following the states’ reopening.

Here are the top five things that happened in markets this week.

1. Federal Open Market Committee meeting

Surging inflation prompted the Federal Reserve to accelerate the taper pace of its quantitative easing program to $30 billion per month.

The Federal Reserve signalled it would raise interest rates three times in 2022, three times in 2023, and twice in 2024.

The statement dropped any reference to transitory factors in its characterisation of inflation and instead noted that supply and demand imbalances “continued to contribute to elevated levels of inflation”.

2. Surge in new COVID cases stifles ASX200 Santa rally

A worrying surge in new COVID cases in NSW and Victoria raises questions about the recent reopening and dampened immediate expectations of a classic end-of-year rally in the ASX200.

3. Bumper Australian jobs report

Australia’s employment jumped by 366,000 in November following the easing of restrictions in mid-October.

The unemployment rate fell to 4.6 per cent from 5.2 per cent in October, despite a recovery in the participation rate.

4. NZ economy stronger than expected

Kiwi GDP contracted by 3.7 per cent over the September quarter due to the Delta lockdown, which was less than expected (4.5 per cent).

The positive growth surprise alongside hot inflation and a tight labour market means the RBNZ will waste little time lifting interest rates early in 2022.

5. Bitcoin is holding on

It’s been a tough month for Bitcoin, which has fallen almost 40 per cent from its all-time high of $US69,000 ($96,500).

However, its ability to hold and drive away from the support provided by the 200-day ma at $47,000 has restored some much-needed stability to the market’s leading cryptocurrency.

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All trading carries risk. The figures stated are as of December 16, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.