European shares rose after selling triggered by variable Omicron

European shares advanced on Monday after last weekend’s sell-off triggered by the coronavirus variable Omicron, as investors settled into a prolonged period of uncertainty about the pandemic.

The European Stoxx 600 Index rose 1.1 percent in early trading, recovering from a drop of more than 3.5 percent on Friday. London’s FTSE 100, Germany’s DAX and France’s CAC 40 rose about 1 per cent.

Meanwhile, futures that track the US S&P 500 Index rose 0.9 percent after the broad gauge of US stocks fell 2.3 percent on Friday. However, markets in Asia came under pressure, pushing MSCI’s broad gauge of markets in the region down about 1 percent. Japan’s Topix fell 1.8 percent, while Hong Kong’s Hang Seng and South Korea’s Kospi were down 0.9 percent.

Brent crude, the global benchmark for oil, rose 4 percent to $75.59 a barrel, after losing more than 10 percent on Friday in its biggest drop since April 2020.

Scientists believe that Omicron may be more transmissible than the highly contagious delta variant and carries mutations that could make it resistant to vaccines.

But Barry Schop, chair of South Africa’s Ministerial Advisory Committee on Vaccines and the doctor who discovered the Omicron variant, told Sky News on Sunday that most patients infected with the strain show only “mild cases”.

Robert Carnell, head of research in Asia Pacific at ING, warned that markets will remain volatile as more information emerges about Omicron that should clarify how governments react to the new strain.

“What the latest round of market moves confirms is that markets tend to overreact to bad news, but then unrealistically cling to any glimmer of hope that enables them to recover,” he said.

“Volatility is probably the only certainty in this environment.”

The World Health Organization also warned on Sunday that it was “not yet clear” whether the severity or transmissibility of Omicron differed from previous strains. Analysts at Moody’s Analytics added that “it will be at least another two weeks before more is known as scientists around the world build a better understanding of the new variant and when the severity of the infection becomes clearer.”

In South Africa, where the alternative was identified, the rand rose more than 1 percent against the dollar on Monday to 16.08 rand after a sharp drop on Friday.

But the pain continued for airline stocks, with Australia’s Qantas plummeting as much as 6.2 per cent in early trading before recovering. Malaysian budget airline AirAsia fell as much as 6.7 percent, while Hong Kong’s Cathay Pacific lost nearly 5 percent, according to Refinitiv data.

The yield on the benchmark 10-year US Treasury, which moves inversely to its price, rose 0.05 percentage point to about 1.54 percent after dropping the most since March 2020 on Friday.

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