Asian-Pacific stock markets showed signs of stabilising as investors prepared for weeks of uncertainty over whether the Omicron variant could derail the global economic recovery.
Trading was erratic early on Monday but there were signs of recovery as S&P 500 futures added 0.8 percent and Nasdaq futures 0.9 percent.
Both indices suffered their sharpest fall in months on Friday, with travel and airline stocks hit particularly hard.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1 percent but was off early lows.
Japan’s Nikkei average was down 0.02 percent at 28.746.49 by the midday break, after dropping 1.4 percent earlier in the session. Australia’s ASX 200 and Hong Kong’s Hang Seng Index pared early morning losses later in the day.
Two-year Treasury yields edged up to 0.55 percent, after falling 14 basis points on Friday in the most significant drop since March last year. Fed fund futures had pushed the first rate rise out by a month or so.
Oil prices also bounced $3 a barrel to recoup some of Friday’s shellacking, while the safe-haven yen took a breather after its run higher.
Marcel Thieliant, an economist at Capital Economics in Singapore, told Al Jazeera the implications of the variant for the regional economy were not clear-cut.
“A more transmissible variant could prompt even more disruptions and restrictions to domestic activity, particularly in China given its zero-COVID strategy,” Thieliant said. “At the same time though, Asian exporters would benefit if the rest of the world imposes renewed restrictions on services spending and goods spending therefore remains strong.”
‘Extremely mild’ symptoms
The World Health Organization (WHO) has designated the Omicron strain a “variant of concern”, but has stressed that it is not yet clear whether it is more severe or transmissible. The world health body has said “preliminary evidence” suggests the variant may more easily infect people who have recovered from COVID-19 than other strains.
Angelique Coetzee, the South African doctor who alerted the world to the variant, told the BBC on Sunday the symptoms she had seen in patients so far had been “extremely mild”, and she believed the world was at this stage panicking unnecessarily.
Dozens of countries have nonetheless shut their borders to the southern part of Africa in response to the variant, with Asia-Pacific nations including Singapore, Australia and Japan implementing or mooting even broader travel restrictions.
Trinh D Nguyen, a senior economist at Natixis, told Al Jazeera the variant posed a risk, but she remained “optimistic” about the region’s reopening and recovery.
“Very little is known about the new variant and there is news that symptoms are milder from South Africa,” Nguyen said. “Asia excluding China just made marginal opening up after being suppressed by the Delta variant and markets are cautious, especially tourism exposed economies like Thailand that rely on not just its own opening up but the rest of the world being willing to live with COVID-19, variant or not, given that we now have tools to fight the virus.”
“We remain optimistic about the region opening up and see this as a risk but hopefully the world has evolved to adopt an endemic strategy as we have more knowledge and tools to fight the virus.”