Investors cling to hope as Omicron option spreads, shares recover

A semblance of calm returned to global markets on Monday as investors waited for more information to assess the severity of the Omicron coronavirus variant on the global economy, leading to a recovery in battered stocks and oil prices.

Judging by Thai ดาวน์โหลด Mt4 Exness, World stock indices rose, oil prices jumped and safe-haven bonds lost ground as markets clung to hopes that the new version of the concern would prove softer than initially thought.

The Dow Jones Industrial Average index rose 137.09 points, or 0.39%, to 35,036.43, the S&P 500 added 38.91 points, or 0.85%, to 4633.53 and the Nasdaq Composite added 166.47 points, or 1.07%, to 15,658.12.

The pan-European STOXX 600 index rose 1.15 per cent, while the MSCI World Stock Index added 0.42 per cent.

News of the option sparked alarm and triggered a sell-off on Friday that wiped about $2 trillion off the value of global stocks as countries imposed new restrictions, fearing the option could resist vaccination and reverse a nascent economic recovery after a two-year period. year of global pandemic.

Omicron has now been found even in Canada and Australia. The World Health Organisation said on Monday that the highly mutated variant posed a very high risk of a spike in infection.

However, investors have been comforted by signs that its impact may not be as severe as was thought. In southern Africa, where the new strain was discovered last week, a leading infectious disease expert said that existing vaccines against COVID-19 were probably effective in preventing severe illness and hospitalisation.

While experts said it was too early to say with certainty how serious the disease caused by the variant would be, a South African doctor, who was one of the first to suspect the new strain, said on Sunday that patients had so far experienced mild symptoms.

"We are still trying to find information in the dark and we will need more data, but things are looking a little more encouraging than they did on Friday," said BlueBay Asset Management IT director Mark Dowding.

The broadest index of Asia-Pacific equities outside Japan, MSCI, fell 0.4% but found support ahead of the 2021 low. Japan's blue-chip Nikkei fell 1.6% as the country banned foreigners from taking part in Omicron shares.

Oil prices, which fell more than 10% on Friday during the biggest one-day drop since April 2020, rose more than 5%.

Oil in the US recently rose 6.62% to $72.66 a barrel, with Brent crude at $76.73, up 5.51% for the day.

Rumours that the OPEC oil producer group and its allies, known as OPEC , might suspend production growth in response to the Omicron spread have helped oil prices rebound.

CHANGE OF EXPECTATIONS

European Central Bank policymakers tried to reassure investors worried about the new option by arguing that the euro zone economy had learned to cope with successive pandemic waves.

That spurred an exit from the safe-haven bond markets, which rose on Friday as investors assessed the risk of a slower start to rate hikes by the US Federal Reserve and less tightening by some other central banks.

Benchmark 10-year bonds last fell 21/32 to 1.5569% from 1.485% on Friday night.

European sovereign bond yields rose and the latest inflation data highlighted the challenges facing the ECB.

Inflation in Germany is set to surpass the 5 per cent threshold in November for the first time in almost three decades, according to regional data from several states released on Monday.

The dollar index rose 0.16 per cent and the euro fell 0.44 per cent to $1.1267.

Agnes Belaisch, chief strategist for Europe at the Barings Investment Institute, said that as the Fed's price hike declines and the dollar weakens, currencies such as the euro and yen should benefit.

"Safe assets will remain in demand and duration will once again be a good place to place," she said. "Cautious investors will want to make some profits on equities after a good run - the opening trade will come back later, hopefully with a vengeance".

 

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