(Bloomberg) — A global rebound in stocks may continue in Asia on Wednesday as investor sentiment improves after being roiled by uncertainty over the omicron virus strain and stimulus outlook.
Futures for Japan and Hong Kong rose, while Australian shares edged up. U.S. contracts fluctuated after the S&P 500 snapped three days of declines and the technology-heavy Nasdaq 100 climbed more than 2%. A gauge of Chinese shares traded in the U.S. surged about 7%.
The return of risk appetite stoked a jump in commodities, including crude oil, while eroding demand for havens, sending Treasury yields higher and sapping the yen. A dollar gauge was steady.
At the same time, a strong 20-year auction underscored ongoing demand for U.S. government bonds amid a savings glut and range of economic risks.
Thinner trading volumes heading into the Christmas holidays could exacerbate market swings, leaving strategists reluctant to read much into day-to-day gyrations during the period. Markets continue to be shadowed by escalating mobility curbs to fight omicron and a diminishing stimulus tailwind.
The global reopening narrative will in time gain traction again, Nicole Webb, Wealth Enhancement Group senior vice president, said on Bloomberg Television.
“While this variant is significant and the impact is powerful, I do still have my rose-colored glasses heading into the New Year because below the surface there is still a lot of opportunity” away from trades that are played out or frothy, Webb said.
Biden Plan
Sentiment got a boost after President Joe Biden said he still has a chance to strike a deal with Senator Joe Manchin to get his roughly $2 trillion economic plan, Build Back Better, through Congress.
On the virus front, the U.S. Food and Drug Administration is poised to authorize a pair of pills from Pfizer Inc. and Merck & Co. to treat Covid-19 as soon as this week, adding to the arsenal of coronavirus treatments.
Biden said omicron will result in more infections among vaccinated Americans but that they are very unlikely to be severely ill.
“We’ve got a wave of Covid, but the undertow at least with each successive wave seems to be weaker,” Rod von Lipsey, managing director at UBS Private Wealth Management, said on Bloomberg Television. “We’re on a very, very strong footing financially and economically speaking. So we think that the markets and investors will be able to withstand that.”
U.K. Prime Minister Boris Johnson ruled out stricter rules before Christmas but urged caution. Germany is set to limit gatherings to 10 people, and France is curbing New Year’s Eve revelry.
“Whipsaw price action continues ahead of the holiday season,” Craig Erlam, senior market analyst at Oanda, wrote in a note, adding that “these are illiquid markets and omicron continues to be a huge cloud of uncertainty over them.”
What to watch this week:
- EIA crude oil inventory report Wednesday
- Bank of Japan Governor Haruhiko Kuroda speaks Thursday
- U.S. consumer income, new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims. Thursday
- Friday: U.S. markets are closed. European markets close earlier
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- SA&P 500 futures were little changed as of 8:05 a.m. in Tokyo. The S&P 500 rose 1.8%
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 2.3%
- Nikkei 225 futures rose 0.6%
- Australia’s S&P/ASX 200 Index rose 0.2%
- Hang Seng Index futures climbed 1.2% earlier
Currencies
- The Japanese yen was at 114.08 per dollar
- The offshore yuan traded at 6.3777 per dollar
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1282
Bonds
- The yield on 10-year Treasuries advanced four basis points to 1.46%
- Australia’s 10-year bond yield rose one basis point to 1.61%
Commodities
- West Texas Intermediate crude rose 0.3% to $71.28 a barrel
- Gold was steady at $1,789.11 an ounce
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
