Peter Nurse 

Investing.com – European stock markets are expected to open firmly higher Monday, unwinding some of Friday’s hefty losses as investors reassess the potential economic damage the newly discovered omicron Covid variant might cause.

At 02:05 ET (07:00 GMT), Germany’s contract traded 2.1% lower, France rose 1.7%, and the U.K contract rose 1.6%.

Coronavirus has rapidly spread around the world. New cases have been reported in Australia, Denmark (Netherlands), Denmark (Danemark), and Denmark (Austria). This is prompting travel restrictions that are increasing as more countries seek to self-isolate.

The World Health Organization labelled the newly called omicron modification “a variant of concern” on Friday, but has also said it was not yet clear whether it is more transmissible than other variants, or if it causes more severe disease.

South African doctors have reported that there have not been any severe side effects from this new variant. Moderna (NASDAQ) suggested Sunday that it might roll out a modified vaccine as early next year. 

Investors are now reassessing the concerns that had gripped the markets last week about the possibility that this variant might resist vaccines and halt the recovery.

The airline and travel sector is likely to rebound strongly as a result, while  energy stocks are also set to gain as crude prices rebounded Monday from last week’s rout. 

Traders are now reassessing the risks to global demand from the new omicron variant ahead of this week’s meeting of top producers to decide production levels moving into the new year.

On Thursday, the Organization of Petroleum Exporting Countries with its allies (a group called OPEC+), meets and will discuss the threats from the new variant, as well as the decision of a U.S. coalition of major consumer to boost global supplies from emergency reserves.

There was widespread expectation that the group would continue to add 400,000 barrels per hour in January to meet demand recovery. But speculation has grown that OPEC+ might halt production increases this week.

After falling 9.50 points on Friday, futures had traded 5% higher at $71.53/barrel by 02:05 ET.

On Monday, key data will be released in Europe including Eurozone economic climate data and Eurozone sentiment data November. Also flash inflation data Germany.

The price of gold rose 0.4% to $1.795.60/oz while it traded 0.4% lower at 1.1267.