By Peter Nurse
Investing.com - U.S. stocks are seen opening higher Monday, rebounding after Friday’s plunge as investors reassess the potential impact of the new Omicron variant of the Covid-19 virus on the economic recovery and future monetary policy.
At 7 AM ET (1200 GMT), the Dow Futures contract was up 235 points, or 0.7%, S&P 500 Futures traded 40 points, or 0.9%, higher and Nasdaq 100 Futures climbed 175 points, or 1.%.
The Omicron variant, first identified in South Africa, has been detected in locations from Australia to the U.K. and Canada, although not in the U.S. yet. It poses a "very high" global risk of infection surges that could have "severe consequences" in some areas, the World Health Organisation said on Monday.
That said, South African health experts have indicated that the symptoms from the new variant have been mild so far, adding that they see the vaccines currently available protecting patients from severe diseases.
This has enabled investors to reappraise the situation in the wake of Friday’s selloff, in which the Dow Jones Industrial Average ended 905 points, or 2.5%, lower, its worst day since October 2020. The S&P 500 dropped 2.3% and the Nasdaq Composite slipped 2.2%.
This week also sees the release of the important monthly official jobs report, with a strong November jobs report on Friday likely to underline the case for the Federal Reserve to speed up the phase-out of its $120 billion-a-month stimulus program at its next meeting in mid-December.
That said, “the emergence of the new variant has naturally questioned whether central bankers can stick to planned goals for policy normalization,” analysts at ING said, in a report.
The retail sector is likely to be in focus Monday as investors try to work out the impact of the Black Friday sales volumes on the sector, while the travel and hospitality sectors should rebound after being severely hit Friday from the news about Omicron.
Crude prices climbed strongly Monday with traders reassessing the risks to global crude demand from the new omicron variant ahead of this week’s meeting of top producers to decide production levels moving into the new year.
The Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, meets on Thursday, and is set to discuss the threat from the new variant as well as the decision of a U.S.-led coalition of major consumers to add output to the global supply from their emergency reserves. The timeline may be due to some slippage after the meeting of OPEC's technical committee of experts was delayed by the Omicron news.
The group had been widely expected to continue with its plan of gradually adding 400,000 barrels a day in January as demand recovers, but speculation is mounting that OPEC+ may decide this week to pause output increases.
By 7 AM ET, U.S. crude futures traded 5% higher at $71.58 a barrel, having slumped over $10 in the previous session, while the Brent contract rose 4.8% to $74.99, after falling $9.50 on Friday.
Additionally, gold futures rose 0.4% to $1,795.30/oz, while EUR/USD traded 0.4% lower at 1.1293.