By Alun John

HONG KONG (Reuters – Asian stocks rose after a one-year-low on Wednesday, as U.S. futures and oil rebounded from the previous day’s selloff. Investors were cautious however due to uncertainty about the Omicron Coronavirus variant’s impact.

U.S. Treasury yields rose supporting the dollar, after Jerome Powell, the chair of the U.S. Fed overnight suggested that the Fed would accelerate its asset purchase pace at its meeting this month.

Omicron, and its potential disruption to the world has attracted the attention of markets. However, the Fed and their rate policy should take center stage. This is the shock that has occurred in the last 24 hours,” stated Kerry Craig (NYSE: Asset Management), global market strategist for JPMorgan.

MSCI’s Asia-Pacific broadest index outside Japan rose 0.6%. This was because traders thought Tuesday’s losses, which brought the benchmark down to its lowest point since November 2020 had been a little too much. There were large regional gains.

It rose 0.7% thanks to an increase in factory activity. Nasdaq futures rose 0.7% after sentiment turned. [.N]

Powell stated that the U.S. central banks will be discussing whether they want to stop bond purchases in December. This is despite a strong economy and slowing workforce growth. The high inflation expected to continue into 2022 was also a factor.

The short-end of the curve saw U.S. Treasury yields rise. Last week, the yield on 2-year notes (which reflects short-term expectations of interest rates) was at 0.6025%. The yield on two-year notes rose from 0.441% Tuesday as traders speculated about the possibility that the new variant would lead to an even moredovish Fed.

Benchmark 10-year bonds also fell, with the last yielding 1.491%, an increase from Tuesday’s low of 1.4443%. [US/]

Inflation rose, causing the dollar to gain ground over its Japanese peers. It also gained some currency advantage by rising yields. The dollar rose to 113.4yen. ()

Omicron’s potential to slow down Fed tapering was already limiting dollar’s safe-haven status since Friday’s news about the new strain.

Because the Australian dollar was weaker than other traditionally risk-friendly assets, such as Asian stocks, its value remained near $0.7138 over the past year.

The oil market reacted strongly to the fall in prices and gained some ground ahead of a meeting of the Organization of the Petroleum Exporting Countries. [O/R]

U.S. West Texas Intermediate oil futures rose 1.9% to $67.43/barrel Futures rose 2.22% to $70.78 per barrel.

However, the COVID outlook is uncertain and researchers, governments and investors continue to try to establish how well current vaccines will protect against Omicron.

The spot price of gold at $1,776 per ounce was up 0.1% and well within its historical range, even with all the excitement.