US stock futures, oil regain some ground after Omicron battering
Asian markets regained a little composure on Monday
as investors settled in for a few weeks of uncertainty on whether the Omicron
variant would really derail economic recoveries and the tightening plans of
some central banks.
Oil prices also bounced US$3 a barrel to recoup some of
Friday's shellacking, while the safe haven yen took a breather after its run
higher.
The new variant of concern was found as far afield as Canada
and Australia as more countries imposed travel restriction to try to seal themselves
off.
Britain called an urgent meeting of G7 health ministers on
Monday to discuss developments on the virus, although a South African doctor
who had treated cases said symptoms of Omicron were so far mild.
"There is a lot we don't know about Omicron, but
markets have been forced to reassess the global growth outlook until we know
more," said Rodrigo Catril, a market strategist at NAB.
"Pfizer expects to know within two weeks if Omicron is
resistant to its current vaccine, others suggest it may take several weeks.
Until then markets are likely to remain jittery."
Trading was erratic early on Monday but there were signs of
stabilisation as S&P 500 futures added 0.8per cent and Nasdaq futures
0.9per cent.
Both indices suffered their sharpest fall in months on
Friday with travel and airline stocks hit particularly hard.
MSCI's broadest index of Asia-Pacific shares outside Japan
eased 0.1per cent but was off early lows. Likewise, Japan's Nikkei pared early
losses to be down 0.9per cent.
Bonds gave back some of their gains, with Treasury futures down 11 ticks. The market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the U.S. Federal Reserve, and less tightening by some other central banks.
Two-year Treasury yields edged up to 0.55per cent, after
falling 14 basis points on Friday in the biggest drop since March last year.
Fed fund futures had pushed the first rate rise out by a month or so.
The shift in expectations undermined the U.S. dollar, to the
benefit of the safe haven Japanese yen and Swiss franc.
Early Monday the dollar had steadied somewhat at 113.81 yen,
after sliding 1.7per cent on Friday. The dollar index held at 96.190, after
Friday's 0.7per cent drop.
The euro paused at US$1.1294, following its rally from
US$1.1203 late last week.
European Central Bank President Christine Lagarde put a
brave face on the latest virus scare, saying the euro zone was better equipped
to face the economic impact of a new wave of COVID-19 infections or the Omicron
variant.
The economic diary is also busy this week with China's
manufacturing PMIs on Tuesday to offer another update on the health of the
Asian giant. The U.S. ISM survey of factories is out on Wednesday, ahead of
payrolls on Friday.
Fed Chair Jerome Powell and Treasury Secretary Janet Yellen
speak before Congress on Tuesday and Wednesday.
In commodity markets, oil prices bounced after suffering
their largest one-day drop since April 2020 on Friday. [O/R]
"The move all but guarantees the OPEC+ alliance will
suspend its scheduled increase for January at its meeting on 2 December,"
wrote analyst at ANZ in a note.
"Such headwinds are the reason it's been only gradually
raising output in recent months, despite demand rebounding strongly."
Brent rebounded 3.9per cent to US$75.57 a barrel, while U.S.
crude rose 4.5per cent to US$71.24.
Gold has so far found little in the way of safe haven
demand, leaving it stuck at US$1,791 an ounce.[GOL/]
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