After a volatile week, the S&P500 closed 1.9 per cent lower as a result of concerns about higher interest rates and fears the surging Omicron variant will bring with it the return of mobility restrictions.

The weaker lead from Wall Street and higher COVID-19 case numbers in New South Wales and Victoria weighed on the ASX200 as it closed 0.7 per cent lower at 7305.

Here are the top five things to watch in markets this week.

1. Omicron transmission rates

Last week’s surge in the Omicron variant coincided with a further incremental easing of restrictions in NSW and Victoria.

Although the broad messaging from leaders is the reopening remains on track, cracks are emerging, and nervous citizens are cancelling holidays, restaurant bookings, and wearing masks.

So will higher case numbers bring the reopening to a halt?

2. RBA meeting minutes

The RBA’s December board meeting minutes are the main highlights on a light local data calendar this week.

They are unlikely to bring much in the way of new information after the RBA governor’s speech last week that covered options around quantitative easing policy and after the bumper November jobs report.

3. Iron ore price revival to continue?

Following easing measures announced by Chinese authorities, the price of iron ore has rallied over 15 per cent to near $US120 ($168.50) per tonne over the past fortnight on hopes of increased steel production in 2022.

Can the rally continue?

4. What next for the Democrats’ ‘Build Back Better’ bill?

Democratic Senator Joe Manchin dropped a bombshell and said he would not support US President Joe Biden’s $2 trillion social spending plan, which passed through the House of Representatives last month.

The Democrats will examine other options, including trimming and splitting the bill.

5. US inflation data

The Federal Reserve’s preferred measure of inflation, Core PCE, which excludes food and energy, is expected to rise by 0.4 per cent in November, taking the annual rate to 4.5 per cent.

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All trading carries risk. The figures stated are as of December 20, 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.