Global Stock Rebound Moderates as Dollar Advances: Markets Wrap

A global rebound in stocks moderated in Asia on Wednesday amid uncertainty over the omicron virus strain’s economic impact and a foggy outlook for U.S. fiscal stimulus.

Equities in Japan and China were steady, while Hong Kong pared gains as a rally in technology shares fizzled. U.S. futures turned lower and European contracts made modest gains. The S&P 500 and the tech-heavy Nasdaq 100 jumped on Tuesday as risk appetite revived somewhat.

A dollar gauge advanced, while crude oil and Treasury yields were steady. 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.

“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.

‘Strong Footing’

“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.”

Singapore will freeze new ticket sales for flights and buses under its vaccinated travel lanes program as the city-state looks to stem the import of omicron. Australian Prime Minister Scott Morrison urged the country’s state and territory leaders to move ahead with reopening plans.

“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.”

Meanwhile, Elon Musk sold more Tesla Inc. shares, taking him closer to making good on his pledge to sell 10% of his shareholding in the electric carmaker.