From Marc to Market:
Overview: The fire that burnt through the capital markets before the weekend, triggered by the new Covid mutation, burned itself out in the Asian Pacific equity trading earlier today. A semblance of stability, albeit fragile and tentative, has emerged. Europe's Stoxx 600 is up about 1%, led by real estate, information technology, and energy. US index futures are trading higher, with the NASDAQ leading. Benchmark 10-year yields are firmer. The US 10-year Treasury yield has risen about six basis points to 1.53%. European yields are mostly 1-2 basis points higher, while the UK Gilt yield is up four basis points. The dollar remains, as we say, at the fulcrum of the major currencies, but in an opposite way, with the funding currencies that rallied strongly before the weekend seeing their gains pared today, while the dollar bloc and Scandis trade firmer. Among the emerging market currencies, the liquid and freely accessible currencies, such as the South African rand, Russian rouble, and Mexican peso are leading the recovery. The Turkish lira and central European currencies, perhaps dragged down by the softer euro, underperform. The JP Morgan Emerging Market Currency Index is slightly firmer after falling around 0.4% before the weekend. Gold held support near $1780 but has been unable to resurface above $1800. January WTI jumped by about 5% after the 13% drop at the end of last week. Iron ore surged 6.5%, recouping in full the 5.6% decline in the last session to approach its recent highs. Winter weather is beginning to be experienced in Europe, and natural gas (Netherlands) is up 7.75% after falling 4.8% ahead of the weekend. Copper is recouping a little less than half of last Friday's nearly 4% fall.
Asia Pacific
Faced with much unknown about the new mutation, several Asia Pacific countries are opting to close their borders to foreign travelers. Initially, countries limited the travel ban to a handful or so of countries from Southern Africa. It does appear that the omicron variant has been around before being sequenced in South Africa, and it is has been found in several countries. However, the origin is still not clear. While some reports from South Africa suggest mild symptoms, there is good reason for the World Health Organization's caution. If a new vaccine is needed for the variant, reports suggest it could take around 100 days.
Recall that Japan has lifted its formal emergency in late September, and the economy is rebounding as anticipated. Today's data showed retail sales rose for a second month in October. The 1.1% increase lifted the year-over-year rate to 0.9%. Purchases of clothing and food surged by 9.2%. Auto sales, still hampered by supply chain disruptions, was the only category that fell. After a frustratingly slow start, Japan's inoculation efforts have been successful, and the vaccination rate is above 75%....
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