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Stocks rebound, bonds dip as Omicron turmoil eases: Markets shroud

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(Bloomberg) – Stocks in Europe rebounded and US equity futures rose with Treasury yields as a semblance of calm returned to global markets as investors reconsidered their worst-case scenarios for the strain of omicron coronavirus.

The Stoxx Europe 600 index jumped more than 1%, recouping some of its worst decline in over a year, with travel and energy stocks leading the advance. The S&P 500 and Nasdaq 100 contracts climbed, WTI oil climbed back above $ 71 a barrel and the 10-year US Treasury yield exceeded 1.50%. The euro slipped and the dollar gauge rose.

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Investors are trying to determine whether the omicron surge ends up being a relatively brief scare from which markets rebound, or a harder blow to the global economic recovery. Much remains unanswered about the new strain: Two South African health scientists have suggested it has had mild symptoms so far, but the World Health Organization has urged caution, saying it will take time to assess the pathogen.

“Despite the overwhelming attraction of buying the downside on tenuous early information on omicron, we are only at a negative headline from omicron to get back to where we started,” wrote Jeffrey Halley, market analyst senior at Oanda, in a note. “Expect plenty of headline price action this week.”

The emergence of the omicron strain also complicates monetary policy. Traders have already pushed back the planned timeline of a first 25 basis point rate hike by the Federal Reserve to July from June. Atlanta Fed Bank chairman Raphael Bostic downplayed the economic risks of a new variant, saying he was open to faster cuts in asset purchases to curb inflation.

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“We know central banks can quickly take an accommodating stance if they need to,” Mahjabeen Zaman, senior investment specialist at Citigroup, told Bloomberg Television. “The liquidity playbook that we have in play right now will continue to support the market.”

Japan led the declines in the Asian equities session after the government closed borders to visitors. The region’s reopening stocks such as restaurants, department stores, rail operators and travel shares also suffered losses.

Meanwhile, Moderna Inc.’s chief medical officer said a reformulated vaccine to combat the new strain may be available early in the new year.

Elsewhere, the South African currency, where the variant was identified, rose against the greenback, although most of its emerging market peers fell. Gold plunged below $ 1,800 an ounce, and Bitcoin rose above $ 57,000 after falling below $ 54,000 on Friday.

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Here are some key events to watch out for this week:

Fed Chairman Jerome Powell and New York Fed Chairman John Williams speak at a virtual event on Monday. Bank of Japan Governor Haruhiko Kuroda speaks in TokyoPowell and Treasury Secretary Janet Yellen in the US Senate on Tuesday. On Wednesday, they face the House Financial Services Committee. Eurozone CPI, Tuesday Chinese PMI, Tuesday Eurozone Manufacturing PMI, Wednesday China Manufacturing PMI Caixin, Wednesday OPEC, Allies May Reassess Oil Supply Stimulus Plans, Fed Thursday Mary Daly of San Francisco and Tom Barkin of the Richmond Fed discuss the job market and inflationary pressures at a virtual event Thursday in the United States. November Jobs Report Friday

For more market analysis, read our MLIV blog.

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Some of the main movements in the markets:

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The Stoxx Europe 600 was up 0.6% at 8:51 a.m. London time. S&P 500 futures rose 0.6%. Futures on the Nasdaq 100 rose 0.9%. The emerging markets index fell 0.4%

Currencies

Bloomberg Dollar Spot Index rose 0.1% Euro fell 0.4% to $ 1.1271 Japanese yen was little changed at 113.35 per dollar Offshore yuan rose 0.2 % at 6.3836 per dollar British pound was little changed at $ 1.3331

Obligations

The 10-year Treasury bill yield rose five basis points to 1.52% Germany’s 10-year yield rose one basis point to -0.32% The 10-year yield of Britain rose three basis points to 0.85%

Merchandise

Brent crude rose 4.8% to $ 76.23 per barrel Spot gold fell 0.3% to $ 1,797.01 per ounce

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