A look at the day ahead from Saikat Chatterjee.
As investors started to be worried that the new Omicron variant might not prove to be as deadly as previously feared, that seems to be the tone in global markets on Tuesday. Money markets are back to pricing the U.S. rate hike by June 2022 and the dollar has repaid half of its losses against the Japanese yen since the variant first hit the headlines, and world stocks are on track for their biggest daily rise in nearly two months.
Australia s central bank said that the Omicron variant outbreak was unlikely to derail the current financial recovery and top U.S. infectious disease official Anthony Fauci told CNN that it does not look like there is a great degree of severity so far.
More good news came from Beijing, which cut the amount of cash banks must hold in reserve on Monday, its second such move this year, releasing about $188 billion in long-term liquidity to help slowing economic growth. There are still questions about the future of China Evergrande Group with a number of bondholders in the heavily indebted property developer saying they did not receive coupon payments by the end of a 30 day grace period on Monday New York time.
The broader economic recovery won't get derailed in 2022, according to investors who pushed European and U.S stock futures higher.
Expectations that global central banks won't rush to tighten policy immediately propped up Chinese shares and boosted the Australian dollar. JPMorgan s strategists have postponed their call for the first UK interest rate hike to February from December earlier, despite robust labour market data. The market gauges of volatility slipped back, with both European and U.S. gauges well below last week s highs.
Oil prices went up after a 5% rebound the day before and cryptocurrencies resumed picking up pieces after a bruising fall over the weekend.
Key developments that should give more direction to markets on Tuesday: