Headlines:

Markets:

  • AUD leads, EUR lags on the day
  • European equities higher; S&P 500 futures up 1.3%
  • US 10-year yields up 0.5 bps to 1.439%
  • Gold up 0.3% to $1,782.63
  • WTI up 3.1% to $71.65
  • Bitcoin up 1.8% to $50,988

No news is good news is the theme that the market is carrying on with to start the week.

Fears surrounding omicron are being put aside as scant data continues to indicate that perhaps the latest virus strain is not as severe, even if it may escape existing vaccines.

Equities are ripping higher once again in a classic risk-on rebound, after a torrid showing last week. S&P 500 futures are pointing higher again, keeping with the cash market bounce of its 100-day moving average.

Meanwhile, bond yields are also maintaining the bounce from yesterday and that is helping with the overall mood.

In FX, commodity currencies are pulling ahead with the aussie and loonie the lead gainers. The former also benefited from a steady hand by the RBA in the wake of omicron, as AUD/USD pushed to 0.7100 from 0.7070. As for the latter, higher oil prices are providing a strong tailwind for the loonie with USD/CAD slipping 0.6% to 1.2675.

The dollar traded more mixed once again as it keeps a light advance against the euro, pound, and yen. Of note, EUR/USD is gradually grinding back below 1.1300 as sellers start to take charge again.

In the commodities space, oil is a standout performer with WTI crude up over 3% and eyeing $72 on a solid rebound above the $70 psychological level.

All signs are pointing to a solid turnaround in risk trades after the fears last week. Bargain hunting seems to be a key factor driving the shift in sentiment but let's not forget that we are still awaiting more news on omicron in the week ahead.

I'd be wary of vaccine makers' comments on the variant, especially regarding efficacy. But even if we are to expect news that it will escape existing vaccines, one can rest assure that vaccine makers can come up with an alternative in practically no time.

That could be a good enough reason for risk trades to bounce back again after initial fears are allayed.