U.S. Futures Gain; Asian Shares Mixed on Omicron: Markets Wrap

(Bloomberg) — U.S. equity futures gained, while Asian stocks were mixed in thin trading as investors mulled the impact of the omicron variant on the global recovery. Shares of troubled China Evergrande Group were suspended in Hong Kong.

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S&P 500 and Nasdaq 100 contracts advanced at the start of the new year, with major markets including Australia, Japan and China all closed for holidays in Asia. Hong Kong’s benchmark gauge fell, dragged down by developers and tech companies, while equities pared gains in South Korea and Taiwan. Euro Stoxx 50 futures were little changed.

Last year “was simply a period of ‘risk on,’” Jefferies strategists led by Sean Darby wrote in a note. “Peering into 2022, we expect volatility to rise, meaning that the return per unit of risk comes to the forefront.”

All eyes are on the omicron variant of Covid-19, which is spreading rapidly but also appears to be less severe than some earlier variants based on the rate of hospitalizations. Investors are also focusing on the policy trajectory of the Federal Reserve and other central banks into 2022, particularly as inflation continues to present a challenge.

There’s a “positive setup into 2022 with Fed and Covid headwinds to ease, and China policy tailwinds,” JPMorgan Chase & Co. strategists led by Mixo Das in Hong Kong, wrote in a report Sunday. “Overall, our economists see less disruption to economic activity and above trend global growth this quarter, particularly in Asia. In terms of Fed tightening, the moment of peak disruption for markets may also be passing.”

Asia’s factory activity continued to expand in December, according to a slew of data released Monday, boosted by resilient demand and the easing of supply-chain bottlenecks.

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While no specific reason was given for the halt in Evergrande trading, Chinese developer shares sank amid local-media reports that the company had been ordered to tear down apartment blocks at a project in Hainan province.

Oil edged higher as Libyan output declined before an OPEC+ meeting on Tuesday to discuss production policy.

What to watch this week:

  • FOMC meeting minutes scheduled for release Wednesday

  • Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday

  • Fed’s Daly discusses monetary policy on a panel Friday

  • ECB’s Schnabel speaks on a panel Saturday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.4% as of 7:05 a.m. in London

  • Nasdaq 100 futures gained 0.5%

  • South Korea’s Kospi index advanced 0.4%

  • Taiwan’s Taiex rose 0.3%

  • Hang Seng Index declined 0.6%

  • Euro Stoxx 50 futures were little changed

Currencies

  • The yen weakened 0.2% to 115.33

  • The Bloomberg Dollar Spot Index gained 0.2%

  • The euro fell 0.2% to 1.1344

Bonds

  • Cash Treasuries are shut in Asia and the U.K. on Monday

  • The yield on 10-year Treasuries closed last week at 1.51%

  • Australia’s 10-year yields rose four basis points to 1.67% on Friday

Commodities

  • West Texas Intermediate crude gained 0.8% to $75.81 a barrel

  • Gold fell 0.2% to $1,825.54 an ounce

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