U.S. equity futures rose and Treasury yields fell as investors assessed the uncertain effects of the Omicron variant on the economy.
S&P 500 futures gained 0.5% on Wednesday, a day after the benchmark posted its biggest one-day jump since March and closed just below an all-time high. Contracts for the Dow Jones Industrial Average also rose 0.5% and futures for the Nasdaq-100 rose 0.6%, indicating a good start to the session for tech stocks.
Vaccine makers Moderna and Pfizer fell 3.8% and 2.6% respectively in pre-market trade. Pfizer and BioNTech said on Wednesday that a third dose of their Covid-19 vaccine had neutralized Omicron in lab tests, but a two-dose regimen was much less effective.
In Hong Kong, China, Evergrande shares slipped 5.5% to their lowest level since the troubled real estate company’s initial public offering in 2009. Evergrande failed to make payments due on certain bonds in US dollars before a final deadline expires on Monday, potentially paving the way for a massive default. Hong Kong’s larger Hang Seng index rose less than 0.1%.
Elsewhere, stocks rebounded after fading when the Omicron variant first appeared in late November. Investors have highlighted evidence that Omicron could cause less severe disease than previous variants, although scientists are still evaluating its virulence and ability to evade vaccines.
“The markets in general – if you look back to 2021 – they’ve looked at any of even partial lockdown episodes or that kind of risk,” said Willem Sels, director of investments for private banking and fortune. at HSBC..
“They assume that the vaccines would be effective or partially effective.”
Mr. Sels expects more volatility. “I think we’re going to have a lot of flip-flops,” he said, pointing to an uncertain outlook for inflation and the potential for mixed economic data next year.
Global markets benefited again this week from measures taken by Beijing to stimulate the slowdown in the Chinese economy. Investors remain on the alert, however, about the Federal Reserve’s plans to tighten monetary policy to curb inflation in 2022.
One of the reasons some investors expect inflation to persist is the tight labor market. More evidence of hiring difficulties is expected to emerge with the U.S. Job Openings and Labor Turnover Survey, scheduled for 10 a.m. ET. Economists predict the data will show employers had more than 10 million vacant positions in October.
A sign of caution for investors, the yield on 10-year Treasury bills slipped to 1.464% on Wednesday from 1.479% on Tuesday. Bond yields and prices move in opposite directions.
Oil prices have prolonged a recent rally, in part because of expectations that the Organization of the Petroleum Exporting Countries and its allies could slow the pace of output growth in January. Benchmark U.S. crude futures rose 0.8% to $ 72.68 a barrel ahead of national oil supply data at 10:30 a.m.
Natural gas prices in Europe rose more than 6% after news reports that Nord Stream 2 could be shut down if Russia invaded Ukraine. The controversial gas pipeline connecting Russia and Germany was due to enter service in 2022, helping to alleviate the gas shortage in Europe.
Global stock markets were generally higher. The pan-continental Stoxx Europe 600 index rose 0.3%, led by health, travel and leisure stocks. German food delivery company HelloFresh fell more than 6% after releasing earnings forecasts for 2022 that fell short of analysts’ expectations.
The Shanghai Chinese Composite Index rose 1.2%, Japan’s Nikkei 225 1.4% and India’s BSE S&P Sensex index rose 1.8%.
Write to Joe Wallace at [email protected]
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