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Stocks, oil regain some composure after Omicron battering -Breaking


© Reuters. A protective mask covering a man’s face during the COVID-19 coronavirus epidemic, is seen looking at an electronic display board showing Japan’s Nikkei Indices outside of a Tokyo, Japan brokerage on September 24, 2021. REUTERS/Kim Kyung-Hoon

Wayne Cole

SYDNEY (Reuters), – Asian markets struggled to regain composure as Omicron spread to developed nations threatened economic recovery.

Petroleum prices recovered some losses following Friday’s Shellacking. Meanwhile, the safe haven of the yen enjoyed a rest after its recent run up.

As more countries implemented travel restrictions to protect themselves, the new concern reached as far as Australia and Canada.

Britain held an emergency meeting with G7 health ministers Monday to discuss the latest developments in Omicron. A South African doctor, however, said that Omicron symptoms are mild.

Rodrigo Catril of NAB, market strategist, stated, “There’s a lot that we don’t know about Omicron. But markets have had to reassess global growth outlooks until we know more.”

Pfizer Omicron may be resistant to the current vaccine within two weeks, according to the NYSE. Others suggest that it could take many weeks. Markets will remain nervous until then.

Although trading was volatile early Monday, there were indications of stability with Nasdaq futures 0.5% and 0.4% added to the market.

Friday saw both the indices experience their sharpest drop in several months, with airline stocks and travel stock particularly affected.

Futures traded firmer at 28370 but were still lower than Friday’s close of cash, which was 28,751.

MSCI’s Asia-Pacific broadest index outside Japan was at 0.2%. However, there were few markets open.

The Treasury futures fell 11 ticks, as bonds lost some of their gains. As investors had priced in the possibility of slower rate increases from the U.S. Federal Reserve and less tightening by other central banks, the market rallied strongly.

The two-year Treasury yields plunged by 14 basis points Friday to 0.50%. It was the worst drop since March 2013, while Fed futures drove the Fed’s first rate hike out by several months.

This shift in expectations led to the devaluation of the U.S. Dollar, which was largely offset by the safety-haven Japanese yen or Swiss franc.

The dollar settled at 113.71 Japanese yen early Monday morning, having dropped 1.7% from Friday. After Friday’s 0.7% decline, the dollar also climbed a little to 96.156.

Following its rally of $1.1203 in the last week, euro fell to $1.1283.

Christine Lagarde of European Central Bank put up a brave face to the recent virus scare by saying that the euro zone is better prepared for the economic consequences of either the Omicron or COVID-19 variants of COVID-19.

This week’s economic calendar is busy with China’s PMIs for manufacturing on Tuesday, which provide an update on the state of this Asian power. This Wednesday’s U.S. ISM survey for factories will be released ahead of payrolls Friday.

On Tuesday and Wednesday, Fed Chair Jerome Powell (with Treasury Secretary Janet Yellen) will speak in front of Congress.

After suffering the largest drop in oil prices since April 2020 (Friday), commodity markets saw oil prices recover. [O/R]

Analyst at ANZ wrote in a note that the move “almost guarantees” that the OPEC+ alliance will stop its planned increase for January at their meeting on 2/12/12.

It’s because of such headwinds that it has been slowing increasing output, even though demand is rebounding strongly.

While the price of a barrel rose by 4.0% to $70.85, it rebounded by 3.6%

So far, gold has not found safe haven demand. It is currently stuck at $1.785 per ounce.