By Alun John

HONG KONG (Reuters – Asian shares continued to gain on Wednesday. The rally was fueled by positive early news about Omicron’s potential effect. However, overnight gains in oil prices started to decline.

“Markets can be sensitive to Omicron news, so the absence of any bad news is being taken positively by equity markets,” stated Stefan Hofer (chief investment strategist at private bank LGT Asia Pacific).

“With each variant we create, there’s a waiting period for the signal from scientists, which can make it difficult for market participants, but we received that yesterday.”

MSCI’s widest index of Asia-Pacific share prices outside Japan increased 0.3% to 1%. The U.S. rose 0.2%

GSK, a British pharmaceutical company, said Tuesday that its COVID-19 antibody-based therapy (NASDAQ:) with U.S. Partner Vir Biotechnology is effective against all Omicron coronavirus mutations.

On Tuesday, a South African study also found that the vaccine COVID-19 boosters could be effective. Pfizer Inc (NYSE 🙂 and BioNTech’s, a partner could aid in preventing Omicron infections. However, the research showed that Omicron can partly evade protection by two vaccine doses.

These reports helped MSCI’s All-Country World Index to Close 2.1% Higher on Tuesday. It was its highest percentage gain since November 2020. The oil price also increased by more than 3 percent.

The markets are also focusing on U.S. CPI data, due Friday. A high print is likely to prompt policymakers towards tapering the massive bond buying program of the Federal Reserve. This programme has kept equity prices below the floor since the outbreak of the pandemic.

Hofer said that the relief rally might be short-lived if U.S. data from Friday show high inflation looking persistent or sticky.”

Jerome Powell, Fed Chair and last week’s commentator on inflation was that it may be time for us to see inflation as temporary. He also suggested the Fed could speed up tapering.

This ought to be a support for the dollar in comparison with other currencies having moredovish central bankers.

The greenback was unchanged against six of its major peers on Wednesday, but the Australian dollar saw its overnight gains rise to $0.7122. This is a significant increase after falling to a low 13 months ago due to Omicron concerns and a relatively dovish central banking. ()

The benefited from better news and higher commodity prices, while rebounding oil prices allowed the Canadian dollar rise to a Bank of Canada policy meeting later Wednesday.

Reuters polled 29 economists and found that they expect the Bank of Canada will keep the rates at 0.25% for the meeting.

Although the benchmark fell slightly on Wednesday after two days’ gains based on Omicron news, it was still up a bit.

It reached 1.4614% at the end of November, a significant increase from Friday’s 1.335% low when Omicron fears first started. However, it still fell well below its pre-Omicron peak of 1.693%.

Two-year yields rise with higher expectations. The current top was just 0.68922%.

Oil prices dropped 0.45%, to $71.79/barrel. The barrel price fell 0.4% to $75.11

It rose 0.3% at $1,789 per ounce within its current range. The rival inflation hedge bitcoin, which was calm following an entertaining weekend, only barely moved to $50,600.