This content was published on December 7, 2021 – 19:38
(Bloomberg) — U.S. stocks staged the biggest rally since March, with major averages surging at least 2% on optimism the omicron variant won’t derail global growth. Treasuries fell, sending two-year yields to the highest in nine months.
Technology shares that led last week’s decline paced the rebound. The Nasdaq 100 Index surged 3%, an ETF that tracks newly public companies jumped almost 5% and small caps climbed 3%. The S&P 500 erased all the losses suffered after Jerome Powell’s hawkish tilt a week ago and was just 0.3% below its last close before the omicron variant rocked markets. The Cboe Volatility Index plunged six points to 21. Bitcoin rallied, the dollar dipped and crude surged past $72 a barrel in New York.
Risk assets are recovering this week after initial data showed the surge in omicron cases hasn’t overwhelmed hospitals and as China’s moves help settle markets whipped by bouts of volatility. Among the riskiest assets, a Goldman Sachs Group Inc. basket of non-profitable tech firms jumped almost 7% Tuesday, clawing back nearly half of last week’s losses.
“This morning’s rally is being fueled by the belief that the omicron variant will not create many problems for the global economy and that China has pledged measures to support economic growth,” wrote Matt Maley, chief market strategist for Miller Tabak + Co. “If those were the reasons why the market has seen such a big increase in volatility since Thanksgiving, we’d agree the worst is likely over and that investors should jump back into the market with both feet.”
On the data front, the U.S. trade deficit narrowed while third quarter productivity fell. Private consumption was the largest contributor to the euro area’s most recent economic expansion. U.K. house prices hit an all-time high. And China’s exports grew faster than expected to a record on external demand and an easing power crunch.
Meanwhile, research showed that a Covid-19 vaccine from GlaxoSmithKline Plc and Canada’s Medicago Inc. was effective against multiple variants of the disease.
“In the wake of steep losses last week, the market mood has been notably more upbeat this week after several health experts across the globe, including the U.S.’s Dr. Anthony Fauci, have said omicron symptoms appear milder, so far,” said Fiona Cincotta, senior financial markets analyst at City Index. “Whilst it is still early days the encouraging news sparked bargain hunters into action. Who would want to miss out on the possibility that a milder variant could accelerate natural immunity to Covid?”
However, equity markets could …….