Stocks and futures rise on Tuesday as concerns about the severity of the omicron virus variant receded and China pledged measures to support economic growth.
Technology shares led gains in Europe’s Stoxx 600 Index and Nasdaq 100 futures rise. Chinese tech stocks also rebounded from last week’s rout, with Alibaba Group Holding Ltd soaring by the most since its 2019 listing in Hong Kong.
Risk assets are recovering this week after initial data showed the surge in omicron cases hasn’t overwhelmed hospitals so far. Easing of Chinese monetary conditions to shore up growth should also offer some succour for markets whipped by bouts of volatility. Technology stocks had sold off last week over a combination of concerns about the variant and Federal Reserve Chair Jerome Powell’s hawkish tilt.
Treasury yields and the dollar were little changed and the oil extended gains.
Equity markets could still be in for further turbulence amid new restrictions to stem the spread of omicron.
Geopolitical tensions are resurfacing. The US and European allies are weighing banking sanctions if Russia invades Ukraine. US government officials will boycott the Beijing Winter Olympics in February due to concerns about human rights abuses.
There is a lot of uncertainty in the markets with the Fed, inflation and omicron spurring a risk-off environment, Sylvia Jablonski, Defiance ETFs chief investment officer and co-founder, said on Bloomberg Television. However, “the economic data looks very good. We don’t need the same sort of monetary stimulus that we had before so maybe the tapering isn’t so bad — we don’t expect it to be too out of control or too quick so there is some good news for buying on the dip.”
On the data front, China’s exports grew faster than expected in November to hit a record on external demand and an easing power crunch.
The nation’s property debt crisis that’s been a drag on the economy continues to be closely monitored as China Evergrande Group’s grace period for some coupons ended with some bondholders yet to receive
payment. Meanwhile, a group of Kaisa Group Holdings Ltd. bondholders sent the company a formal forbearance proposal, designed to buy the developer some time and avoid a default.
The Stoxx Europe 600 rises 1.5% as of 8:44 am London time and futures on the S&P 500 also climb 1%.
While futures on the Nasdaq 100 rise 1.4%, futures on the Dow Jones Industrial Average also rise 0.8%. The MSCI Asia Pacific Index falls 0.9% and the MSCI Emerging Markets Index also drops 0.9%.
While the Bloomberg Dollar Spot Index falls 0.1%, the euro was little changed at $1.1289.
The Japanese yen falls 0.1% to 113.65 per dollar and the offshore yuan was little changed at 6.3689 per dollar. The British pound was little changed at $1.3274.
The yield on 10-year Treasuries was little changed at 1.44% and Germany’s 10-year yield advanced two basis points to -0.37%. Britain’s 10-year yield advanced two basis points to as much as 0.76%.
While Brent crude rises as much as 1.7% to $74.33 a barrel, spot gold climbs 0.3% to $1,783.42 an ounce.