Omicron risk still looms on markets despite the latest pullback seen

Stocks rose with U.S. equity futures Tuesday on wagers that vaccines can help tame the omicron virus outbreak and signs that U.S. President Joe Biden could yet revive his $2 trillion economic agenda. We also saw the dollar softened a little on the wake of improving market appetite for risk assets and currencies, extending its overnight losses.The dollar index, which measures the currency against six major peers, dropped to as low as 96.450, down marginally on the day after losing 0.12% overnight. U.S. stock indexes retreated more than 1% with the Dow Jones Industrial Average falling 1.23%, the S&P 500 dropped 1.14% while the Nasdaq Composite also fell 1.24%. Focus this week (Thursday) in the U.S would be on the U.S. consumer income, new home sales, U.S. durable goods, University of Michigan consumer sentiment, initial jobless claims.

European markets appeared set for a higher open with the pan-region Euro Stoxx 50 futures up 1.1%. German DAX futures rose 0.93% while London’s FTSE futures added 1.02%. Euro Stoxx 50 futures and shares in Asia are rallying, repudiating the selloff in the U.S. Global investors aren’t buying to bear story coming out of America Monday. The S&P 500 will more likely gain for the first time in four days Tuesday if it follows the trend. The open speaks more of a modest recovery after a lot of downside rather than some sort of seasonal euphoria. Gilts cheapened up 2bps across the curve on the open, underperforming bunds and USTs. Bunds are on the front foot on the last day of ECB PEPP buying for 2021 but ranges are relatively narrow.

Brent futures fall as much as 0.4%, erasing a gain of as much as 1.4%. Global benchmark trades 0.2% lower at $71.37/bbl a barrel as of 8:37am London time while WTI also pares earlier gains to trade little changed at $68.66/bbl. The EIA crude oil inventory report is due Wednesday and one to watch out for.