A semblance of calm returned to world markets as investors waited for more details to assess the severity of the Omicron coronavirus variant on the world economy, allowing battered stocks and oil prices to rebound.
Global stocks rallied, oil prices bounced and safe-haven bonds lost ground as markets latched onto hopes the new variant of concern would prove milder than initially feared.
The Dow Jones Industrial Average rose 290.64 points, or 0.83%, to 35,189.98, the S&P 500 gained 71.91 points, or 1.57%, to 4,666.53 and the Nasdaq Composite added 317.81 points, or 2.05%, to 15,809.47.
The pan-European STOXX 600 ended up 0.7%, logging its best day in a month and recovering some of Friday’s 3.7% slump triggered by concerns around the newly discovered variant.
MSCI’s gauge of stocks across the globe gained 0.79%.
News of the variant triggered alarm and a sell-off on Friday that wiped roughly $2 trillion off the value of global stocks as countries imposed new restrictions for fear the variant could resist vaccinations and upend a nascent economic re-opening after a two-year global pandemic.
Omicron has now been found as far afield as Canada and Australia. The World Health Organisation said on Monday the heavily mutated variant poses a very high risk of infection surges.
Still, investors drew comfort from signs that its impact might not be as grave as feared. In South Africa, where the new strain was detected last week, a top infectious disease expert said existing COVID-19 vaccines are probably effective at preventing severe disease and hospitalisation.
“Right now the market is reacting positively to statements that this variant is not going to be a major issue but there still remains a fair amount of concern,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
A South African doctor who was one of the first to suspect a new strain said on Sunday patients so far appeared to have mild symptoms.
“It was reported the new strain of the virus is ‘unusual but mild’ and that seems to be the driving force behind the rally in stocks today,” said David Madden, market analyst at Equiti Capital.
via Reuters
