SYDNEY- US stock futures led a market rebound on Monday as investors prepared to wait a few weeks to see if the Omicron coronavirus variant would really derail economic recoveries and the tightening plans of some central banks.
Oil prices bounced more than $3 a barrel to recoup a chunk of Friday’s shellacking, while safe haven bonds and the yen lost ground as markets latched onto hopes the new variant of concern would prove to be “mild”.
While Omicron was already as far afield as Canada and Australia, a South African doctor who had treated cases said symptoms of virus were so far mild.
“Another key difference is there are far higher vaccination take up rates globally now compared with when Delta emerged,” said Craig James, chief economist at asset manager CommSec.
“What the news on Omicron does highlight is the need for central banks and governments to take a cautious approach to removal of economic support and stimulus.”
Trading was erratic on Monday but there were signs of stabilization as S&P 500 futures added 1.0 percent and Nasdaq futures 1.2 percent. Both indices suffered their sharpest fall in months on Friday with travel and airline stocks hit hard.
EUROSTOXX 50 futures rallied 1.7 percent, while FTSE futures firmed 1.3 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent, but found support ahead of its 2021 low. Likewise, Japan’s Nikkei recouped early losses to be almost unchanged.
Bonds gave back some of their hefty gains, with Treasury futures TYc1 down 16 ticks. The market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the US Federal Reserve, and less tightening by some other central banks.
