Stocks Futures, oil Prices Rise after Omricon Variant

A calm returned to world markets on Monday as investors waited for more details to assess the severity of the Omicron coronavirus variant on the world economy, allowing battered stock markets and oil prices to recover.

Asian Markets, European shares and U.S. stock futures firmed, oil prices bounced more than $3 a barrel, while safe-haven bonds lost ground as markets latched onto hopes the new Omrican variant of concern would prove to be “mild”.

Last Friday wiped roughly $2 trillion off the value of global stocks, as countries clamped on new curbs for fear.

Vaccine makers have announced measures to investigate omicron with testing already underway. And While it remains to be seen how omicron responds to already existing vaccines or whether new formulations are required, Moderna’s Chief Medical Officer Paul Burton said Sunday the vaccine maker could roll out a reformulated vaccine against the omicron variant early next year.

“Pfizer expects to know within two weeks if Omicron is resistant to its current vaccine, others suggest it may take several weeks. Until then markets are likely to remain jittery.”

The World Health Organization on Friday labeled the omicron strain a “variant of concern.” While scientists continue to research the variant, omicron’s large number of mutations is alarming. Preliminary evidence suggests the strain has an increased risk of reinfection, according to the WHO. The variant was first reported to the WHO from South Africa and has been found in Botswana, canada, U.K., Hongkong, Israel, Belgium, the Netherlands, Germany, Italy, Australia. And a number of countries imposed flight bans from countries in southern Africa. 

Crude oil futures were also rebounding from a plunge Friday, with benchmark U.S. crude CLF22, 5.09% up 5% to $71.61 a barrel, and Brent crude BRNF22, 4.68%, the international benchmark, jumping more than 4% higher to $76.08 a barrel.

Speculation that oil group OPEC and its allies, OPEC+, may pause an output increase in response to the spread of Omicron aided the oil price rebound.

Europe’s STOXX 600 index rallied 0.9%, having on Friday suffered its biggest one-day fall since June 2020. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4%, but found support ahead of its 2021 low. Japan’s blue-chip Nikkei fell 1.6% as the country moved to bar foreigners to head off the Omicron strain.