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Buying the Omicron dip

EconomyNov 29, 2021 02:50AM ET
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© Reuters. People walk across Westminster Bridge after new measures were announced yesterday due to the Omicron coronavirus variant, in London, Britain, November 28, 2021. REUTERS/Tom Nicholson

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a "variant of concern".

After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have "very mild" symptoms and investment houses don't look to have budged that much. Credit Suisse (SIX:CSGN), for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda (NASDAQ:VNDA) Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant "will take days to several weeks", said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer (NYSE:PFE) needs to be reworked.

So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB's Lagarde said: "We now know our enemy and what measures to take."

Key developments that should provide more direction to markets on Monday: * ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

Buying the Omicron dip
 

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Comments (6)
Studd Muffin
FlipTicks Nov 29, 2021 4:57AM ET
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lol Lagarde. " We know our enemy and what measures to take" - I think she means zero rates and print 50 billion per day. Its the only way to tackle the virus!
Waldemar Gau
Waldemar Gau Nov 29, 2021 4:18AM ET
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we will see in some weeks we will know more about omicron, maybe it will Show us, that it is better to get this Virus to end Corona because it is harmless. But how i said in some weeks....
Jamie An
Jamie An Nov 29, 2021 4:09AM ET
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US gave fear in market to control oil price but the effect was serious and maybe let the rally again. New covid? I don't care mild COLD
Max German
MaxiGE Nov 29, 2021 3:55AM ET
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or selling the buying the omicron dip?
Waldemar Gau
Waldemar Gau Nov 29, 2021 3:48AM ET
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rumors that omicron is less deathly and give you immunity vs corona after you just beeing some days tired.... better as beeing vaccinated again and again
Gold Follower
Gold Follower Nov 29, 2021 3:12AM ET
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one year gain +35% and one day -2,2% and its buying a dip opportunity xD
 
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