Holiday trading brought gifts for bulls, as the S&P 500 set an all-time high yesterday, with the good cheer spreading to other indices and asset classes. Is there room for an encore, or might this be too much of a good thing? With oil prices climbing, natural gas prices calming in Europe, and covid cases rising but hospitalizations and government restrictions trailing, there's a lot in the air.

Here's what you need to know in financial markets on Tuesday, December 28th.

1. Oil Prices Heating Up

Yesterday, oil started lower before reversing for a more than 2% gain. Today, Crude Oil WTI Futures are up 1.4% while Brent Oil Futures are up 1.2%, each setting one-month highs. It fits with the markets' theme for the last week - demand will return and any hurdles from the Omicron variant of Covid-19 will be temporary. The question in oil's case is whether this ends up pressuring the economy via higher input costs and inflationary pressures.

Read also: 5 Reasons Energy Stock APA Corporation Is A Good Bet For 2022

2. After All-Time Highs, Where's The Ceiling?

S&P 500 Futures are up .27% and above the 4800 mark for the first time, fresh off the index closing at an all-time high yesterday. Nasdaq futures were up .5%, reflective of the tech sector's continued strength, and Dow futures are up 83 points, or .23%. The Santa Rally - the tendency for markets to rise during the last five trading sessions of one year and the first two of the next year - appears upon us, and unless surprising bad news pops up, it's unclear what will slow down the momentum.

In line with the momentum theme, Tesla (NASDAQ:TSLA) shares are up 1.2% pre-market after Wedbush analyst Dan Ives hiked his price target for the automaker from $1100 to $1400/share. Nvidia (NASDAQ:NVDA) is up 1.5% as well, on no specific news.

Read also: This Is My #1 Suggestion For Markets In 2022

3. European Natural Gas Eases

Dutch TTF Natural Gas Futures in Europe continued to drop, marking the fifth straight day of declines, as LNG cargoes from the U.S. and news of a planned meeting between the U.S. and Russia may have eased concerns of an energy shortage in the region. European utilities such as Iberdrola (MC:IBE) and Enel (MI:ENEI) traded higher as a sign of relief on the continent. Eyes are on the forecast, with mid January expected to bring a blast of cold weather, increasing demand for gas as an energy and heating source.

Read also: What To Expect From Global Markets In 2022: Growth and the Rise of Small Caps

4. Cryptocurrencies Dip, Gold rises

After a positive start to the week, leading cryptocurrencies have fallen off. Bitcoin is down 3.3% while Ethereum is down 3.5%. Solana is down 4.5% while Cardano, yesterday's leader, is down 6%. The sector didn't get the "bulls went home for the holidays and talked family members into buying" bump, but it's unclear what news might be driving the sell-off today, if any.

On the flipside, gold futures are up .5% in early trading, whether attributable to concerns over spiking COVID-19 cases or perhaps the renewed emergence of inflation.

Read also: 2022 Metals Outlook: Demand Remains Robust Amid Energy Shift, Supply Chain Squeeze

5. Covid Cases Setting New Highs, But Restrictions Staying Lighter

Covid cases continue to set new heights in places around the world, but so far governmental responses have been muted. The Center for Disease Control (CDC) announced that quarantines for COVID could be only 5 days instead of 10 days; France enforced public gathering restrictions but kept schools open; and Spain has so far only required outdoors mask wearing. While people wait to see how reduced the severity of the omicron variant might be and what the full impact will be on hospitals and lives, governments around the world are exercising caution in taking the sorts of measures seen last year around this time or at the outset of the pandemic.

Whether omicron means the end of the pandemic from a health standpoint or just from a policy standpoint remains to be seen, and fingers are crossed that omicron is indeed mild. So far, the market has taken things in stride with only a couple short-lived sell-offs, and nothing that has restricted Santa's effect on the markets.