US stocks rallied on Tuesday despite risk appetite returning to markets. The Nasdaq 100 rose 2%, with Micron Technology making an upbeat outlook. Nike shares also rose as revenue in North America surged, offsetting declines in China. Meanwhile, Pfizer and Merck & Co traded at session lows as Bloomberg reported the FDA intends to approve its coronavirus pills this week.
Risk appetite surged after a top manager at Novavax said the company expects to receive data on the effectiveness of its Covid-19 vaccine against the omicron variant within a few days. UK Prime Minister Boris Johnson also noted that he has no plans to introduce new restrictions before Christmas. And in South Africa, where the new strain was first discovered, the number of daily infections fell to their lowest level in two weeks.
"The omicron's potential damage to economic activity will be reasonably short and shallow," said Art Hogan, chief market strategist at National Securities. "With household and corporate balance-sheets in good shape and sentiment still strong, we think it's reasonable to expect that the economy will manage to navigate the rough waters," he added.
On Tuesday morning, the global investment committee of Credit Suisse changed its stocks allocation from overweight to neutral, citing increasing risks associated with the omicron variant.
Other key events for this week are:
- oil inventory report of the EIA (Wednesday);
- speech of Bank of Japan chief Haruhiko Kuroda (Thursday);
- data on US consumer income, new home sales, durable goods, consumer sentiment and jobless claims (Thursday);
- closing of US markets (Friday)';
- early closing of European markets (Friday).
