Dow Set to Rise, Cryptos Under Pressure as Omicron and Fed Policy Loom Large—and What Else Is Happening in the Stock Market Today

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Investors were looking at Covid-19 and monetary policy to move into a new trading week.

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Angela Weiss / AFP via Getty Images

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The stock market was rising on Monday, as investors contemplated developments related to the new Omicron version of the coronavirus and the possibility of tighter monetary policy from the Federal Reserve.

Futures for the Dow Jones Industrial Average opened 200 points higher after closing down 59 points at 34,580 on Friday. Futures for the S&P 500 signaled a similar opening but the Nasdaq was poised to open near flat.

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Overseas, the pan-European Stokes 600 rose 0.6%. Hong Kong’s Hang Seng index dropped 1.8% amid continued declines in Chinese tech stocks such as Alibaba (ticker: BABA) and renewed fears of default at indebted property developer China Evergrande (3333.HK).

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Investors’ attention has been focused on the new, heavily mutated Omicron version of the coronavirus, news of which sparked the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though of a small sample size—suggested that symptoms caused by Omicron were mild compared to other types.

“It still looks like we’re in the estimating phase of what Omicron’s impact will be,” said Ross Mold, analyst at broker AJ Bell. “It would be naive to dismiss further volatility as the market attempts to figure out what is really happening.”

The optimism on O’Micron comes as Federal Reserve policy is pushing investor sentiment in the other direction. Fed Chair Jerome Powell indicated last week that the central bank would consider accelerating the slowing, or tapering, of monthly asset purchases, which adds liquidity to markets amid high inflation.

“We are really at an attractive crossroads in the markets at the moment. Market sentiment on the virus and policymakers at the Fed are moving in opposite directions,” said Jim Reid, a strategist at Deutsche Bank,

“As it stands, the Fed is likely to accelerate its taper next week with a market that is concerned that this is a policy error,” Reid said. “I appreciate that until we have more certainty on Omicron, the policy error thesis will be harder to disprove.”

In the commodity space, oil prices were rising on Monday, when Saudi Arabia raised January prices for Asian and US clients by $0.60 over the weekend, in a sign of strong demand expectations.

Futures contracts for the international oil benchmark Brent rose 2.5% to above $71.50 a barrel, while US futures for West Texas Intermediate crude were similarly up over $68 a barrel.

Jeffrey Haley, an analyst at broker Oanda, said: “Given that OPEC+ continues to push ahead with its planned 400,000 barrel-per-day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is taking a cup.” I have a virus.” “Saudi Arabia’s confidence, along with a South African Omicron article over the weekend, fuels markets looking for good news in any corner.”

The cryptocurrency market remained depressed after the digital asset plunged over the weekend. bitcoin and ether,
The two major cryptocurrencies, having shunned their lows after a steep fall on Saturday, were slipping after holding steady on Sunday. Bitcoin was trading below $47,500 – recently down from over $57,000 as of Friday – with Ether slightly above $4,000.

Write to Jack Denton at [email protected]

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