Japan has confirmed its first case of infection by omicron
Following a strong sell-off witnessed during a shortened holiday trading session on Friday, Wall Street stocks bounced overnight to recover less than half of losses. The selling pressure has eased as Biden said lockdowns in response to the omicron variant are currently off the table while Moderna highlighted that new vaccine formulations could be ready by early 2022. Against this backdrop, the Dow Jones Industrial Average gained 0.68%, the S&P 500 added 1.3%, and the tech-heavy Nasdaq Composite rose 1.9%.
Asian stocks gave up early gains to finish mostly lower on Tuesday amid the resurgent worries about a new virus. The Shanghai Composite gained less than 0.1% after the data showed that China’s manufacturing PMI expanded for the first time since August, to arrive at 50.1, above expectations of 49.6. In South Korea, Kospi shed nearly 2.5% while the Nikkei 225 lost 1.63% as Japan has confirmed its first case of infection by the new omicron variant of the coronavirus.
In Europe, equities shed over 1% at the open on Tuesday, as risk sentiment kept deteriorating following a short-lived bounce, with the pan-European Stoxx 600 falling 1.2% in early trade. Similarly, U.S. stock index futures sharply reversed course after yesterday’s recovery after Moderna CEO said he expects existing vaccines to be less effective against the new variant.
Despite risk aversion, the dollar is mostly on the defensive today as the US Treasury yields keep losing ground. As such, EURUSD is now back above the 1.1300 figure and was last seen flirting with the 1.1350 region, targeting the descending 20-DMA that arrives marginally below the 1.1400 level. Later in the day, Powell’s comments on the virus and the economy could add to the selling pressure surrounding the greenback.
