MARKET WRAPS

Watch For:

Pending Home Sales for October; Canada Balance of Payments for 3Q; Canada Industrial Product & Raw Materials Price Indexes for October

Opening Call:

Stock futures gained Monday, indicating major benchmarks might recoup some losses from Friday's selloff as investors continued to monitor the likely implications of a new variant of Covid-19.

"Friday was a panic selloff," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Traders have had time to sit back and breathe a bit," she added, saying that trading volumes were lower over the Thanksgiving holiday, likely exacerbating declines.

Investors are awaiting more clarity on the likely transmissibility and severity of the Omicron variant and whether it will weigh on the efficacy of vaccines. Some money managers worry that the new strain could hit global mobility and the economic recovery.

Israel has banned foreigners from entry and Japan has said it will close its borders to foreign visitors until more information about Omicron is available. The U.K. has reintroduced mask mandates and PCR tests for travelers.

Others expect that the economic impact of the variant will be limited as vaccine manufacturers update their shots to combat it.

"We know in a situation like this, we know the winds can change very quickly. We can get one piece of news and [the market's] back to red," Ms. Ozkardeskaya said.

Overseas, the pan-continental Stoxx Europe 600 added 0.8%. However, major stock indexes in Asia fell.

Economists at Morgan Stanley Asia said that countries that had instituted Covid-zero strategies, such as China, Hong Kong and Taiwan, would likely see limited near-term economic impact from the new variant. Others, such as Japan, South Korea and Singapore, would suffer more, including through greater pressure on their healthcare systems.

Forex:

The dollar has started the week higher against a range of currencies, including the euro, as investors continue to evaluate the danger of the newly-emerged omicron variant of the coronavirus. So far, there are encouraging signs that the symptoms appear mild compared with other variants, but the uncertainty is still likely to lead to greater volatility in currencies, said MUFG.

"The developments should continue to favor higher FX volatility. European assets and currencies had already been undermined in recent weeks by another Covid wave heading into the winter. The new variant risks making that situation worse," MUFG said.

CBA said the dollar is likely to remain elevated this week, particularly against commodity currencies, even as markets pare back Fed tightening expectations due to Omicron uncertainty.

Some FOMC officials have recently suggested they are open to upping the pace of tapering in December, but "the emergence of omicron may delay such a policy change," CBA said.

Bannockburn Global Forex said Omicron has injected a new dynamic into foreign exchange markets and a key risk is that uncertainty about the level of threat is not lifted quickly, which would underpin volatility.

It said there are three key changes since the middle of last week: odds of a Bank of England rate increase next month have fallen further; acceleration of Fed tapering seems unlikely, and prospects for stronger world growth are diminished on the margins.

"This undermines risk appetite and weakens those currencies that often appear to do better in robust growth phases, e.g., dollar bloc, Scandis, and most emerging market currencies."

Bonds:

Investors sold out of government bonds, pushing up yields.

Mizuho said omicron raises uncertainty around the effectiveness of vaccines and brings back the possibility of full lockdowns.

"Omicron is potentially a game changer. ince there's a risk that current vaccines are rendered much less effective, markets need to account for the scenario in which we go back into full lockdowns."

Mizuho ascribed a 20-25% probability at this stage to this scenario. This risk means that investors and central bankers will need to be revising down their growth forecasts, reducing the urgency of policymakers to immediately raise interest rates.

Commodities:

Oil futures gained more than 5% in Europe, clawing back significant proportions of their sharp losses on Friday that came as major economies imposed travel restrictions on countries where the Omicron variant of the coronavirus has spread. Low trading volumes--with the U.S. celebrating Thanksgiving--added to the volatility.

"Given the lack of information on the latest variant, one could probably question the scale of Friday's selloff and whether it is really justified," said ING's Warren Patterson, adding that "the market seems to be coming to that realization in early morning trading today, with a relief rally underway." The market's attention will soon turn to OPEC+, which meets later this week.

Jefferies said Omicron jeopardizes what was an increasingly positive near-term outlook for mining stocks.

"Regardless of whether this new variant is a real issue, the sector is likely to be under short-term pressure as there is a renewed risk of lockdowns, which would negatively impact demand and push investors away from such a highly cyclical sector."

Still, Jefferies--which said the mining sector is otherwise "underowned" and poised to benefit from higher metals prices--reckons investors should buy mining stocks in bouts of short-term weakness because the medium- to long-term fundamental outlook is unchanged and still very positive.

TODAY'S TOP HEADLINES

Clearlake Capital to Buy Quest Software From Francisco Partners

Clearlake Capital Group LP has struck a deal to buy Quest Software Inc. from Francisco Partners in the latest sign of private-equity firms' voracious appetite for software.

The deal, expected to be announced as soon as Monday, values Quest at $5.4 billion including debt, according to people familiar with the matter.

Amazon Builds Out Network to Speed Delivery, Handle Holiday Crunch

In the past two years, Amazon.com Inc. has added workers at an unprecedented clip to keep up with a pandemic-induced surge in demand. As it has done so, an even bigger expansion drew less attention: The company is close to doubling the size of its fulfillment network.

Amazon blanketed the country with more than 450 new facilities used to store, sort and ship items, according to logistics consultant MWPVL International, doubling down on a logistics empire that aims to deliver items in one day or less, and increasingly to do so without the help of third-party shippers.

Nissan to Spend $17.6 Billion on Battery-Powered Vehicles Over Five Years

TOKYO-Nissan Motor Co. said Monday it plans to spend $17.6 billion over the next five years as it adds 20 new battery-powered vehicles to its lineup.

The company hopes to recapture a degree of the prominence it held in the electric-vehicle race after its pioneering introduction of the Leaf EV more than a decade ago. Investors have boosted the share prices of car makers that are betting big on EVs, including relative newcomers such as Tesla Inc. and industry stalwarts like Ford Motor Co. and Volkswagen AG.

Covid-19 Vaccine Makers Assess Omicron Response

Vaccine makers will spend several weeks assessing the danger and potential impact of the coronavirus's new Omicron variant.

But they are already racing to develop ways to combat it.

Activist Investor Ancora Urges Berry Global to Explore a Sale

Activist investor Ancora Holdings Inc. is pushing Berry Global Group Inc., a packaging manufacturer with a roughly $9 billion market value, to explore a sale.

Ancora, which owns about 1% of Berry Global, is urging it to explore strategic alternatives including a possible sale and make other changes, according to a copy of a letter the activist sent to the company's board Sunday that was viewed by The Wall Street Journal.

Airlines Avoid Thanksgiving Pitfalls as Daily Passengers Top Two Million

Travelers returning home Sunday after the Thanksgiving holiday are encountering busy airports and full flights, but relatively few of the problems that have plagued air travel in recent months.

The holiday week has been a test of whether U.S. airlines have done enough to prevent the kinds of snafus that have resulted in major meltdowns and thousands of canceled flights.

Australia Seeks to Make Social-Media Firms Liable for Users' Defamatory Comments

SYDNEY-Australia said on Sunday that it would introduce legislation to make social-media companies liable for defamatory comments published on their platforms, in a move that risks exposing tech companies to future lawsuits.

Prime Minister Scott Morrison said the legislation also aims to unmask people who make hurtful comments online by requiring companies such as Meta Platforms Inc.'s Facebook to disclose their details, such as an email address or cellphone number, when a complaint is made.

Companies See Omicron Variant as Latest Unknown in a Pandemic Full of Shocks

U.S. companies responded to the new Covid-19 variant with a mix of both concern and confusion. Some executives scheduled calls with internal teams to assess the threat or peppered health advisers with questions, while many cautioned that they would hold off in making changes to operations until more is known.

The fast-spreading Omicron variant pushed companies in a range of industries to consider how safety measures and new workflows created during the peak of the pandemic could be reinstated. It also served as a reminder, executives say, that navigating through the unknowns of Covid-19 is a new reality of corporate management.

U.S.-Listed Digital Realty Trust Unit Seeks to Raise Around $700 Million in Singapore IPO

Digital Realty Trust Inc.'s unit is planning to raise up to $682 million through a real estate investment trust listing in Singapore, which if successful would be the largest offering in more than four years.

Digital Core REIT, a unit of the U.S.-listed company, is planning to sell up to 267 million units at a fixed offer price of US$0.88 per unit, according to a term sheet seen by The Wall Street Journal.

Hertz-Tesla Deal Signals Broad Shift to EVs for Rental-Car Companies

Car-rental customers could soon see more electric-vehicle options on airport lots and other places where they are looking to reserve a ride.

The rental-car industry, long a big bulk-purchaser of new models in the car business, is sharpening efforts to add more battery-powered vehicles to fleets, the latest in a broader global shift among companies embracing greener technologies to cut their greenhouse-gas emissions.

Omicron Variant Is Reported in More Countries as Officials Grapple With How to Respond

Countries around the world reported their first cases of the Omicron variant over the weekend and some imposed new travel restrictions, racing to protect themselves against the potentially more contagious strain even as scientists cautioned they don't yet know how severe it will prove to be.

Canada, Australia, the Netherlands and Austria on Sunday joined a group of countries that have detected a strain first documented in South Africa that authorities said could pose a greater risk of people falling ill with Covid-19 a second time and could be more transmissible than other variants.

Labor Talks to Start in 2022 at Congested West Coast Ports

U.S. shippers struggling with supply-chain gridlock on the West Coast face new concerns in the coming year as dockworkers and marine terminals gird for talks on a new labor contract.

Eurozone Economic Sentiment Declines in November

Confidence among businesses and households in the eurozone fell in November amid rising inflation, supply-chain constraints and a surge of coronavirus cases.

The European Commission said Monday that its economic sentiment indicator, an aggregate measure of business and consumer confidence, fell to 117.5 in November from 118.6 in October. The result was in line with the forecast from economists polled by The Wall Street Journal.

Eurozone Inflation Likely Hit Record High in November

Consumer-price inflation in the eurozone likely hit a record high in November, but many economists think that might mark a peak for now, and therefore don't expect the European Central Bank to raise its key interest rate next year.

As in the U.S., consumer prices in the eurozone have risen faster over recent months than most economists and policy makers had expected. The data have raised questions for investors, businesses and households about the credibility of central bank assertions that this period of high inflation is likely to prove transitory.

Buyout Boom Gains Steam in Record Year for Private Equity

Big leveraged buyouts are back, and this year's crop might just be a taste of things to come.

Private-equity firms have announced a record $944.4 billion worth of buyouts in the U.S. so far this year, 2.5 times the volume in the same period last year and more than double that of the previous peak in 2007, according to Dealogic. So far this year, there have been five $10 billion-plus deals in the U.S., equaling the total in all of 2007, though still below the high-water mark of nine in 2006.

Black Friday Brought Shoppers Back to Stores

U.S. shoppers spent more time and money at bricks-and-mortar stores over the Thanksgiving holiday weekend than the same period last year, though foot traffic remained below pre-pandemic levels.

The rebound marks a reversal from 2020 when the pandemic accelerated a yearslong shift of holiday spending occurring online at the expense of in-store shopping. It also shows retailers were able to secure spending on the key Black Friday selling day, analysts say, even though discounts weren't as prevalent this year and they spent weeks nudging customers to shop earlier in the season.

Black Friday Rout Shows Dangers of Margin Borrowing

Friday's global retreat from riskier assets exposes a vulnerability of the broad market advance of the past year and a half: the rising use of leverage, or borrowed money.

Traders said the Black Friday rout, which hammered stocks and energy prices from France to India to the U.S., doesn't necessarily presage a broader pullback unless further bad news about the new variant of Covid-19 comes to light. But the reversal underscores the fragility of the rebound from the March 2020 lows, which ranks as the fastest return to record highs following a decline of at least 20% from a previous peak.

The Evergrande Blueprint Worked for Other Chinese Developers, Until It Didn't

China's property boom has spawned numerous developers that, like industry giant China Evergrande Group, borrowed heavily to fund breakneck growth.

Now they are inflicting unprecedented losses on international investors as credit grows scarce and sales of new homes decline. Investors have dumped their bonds, setting off alarms over the companies' finances.

Omicron Variant Not Detected Yet, but Likely Already in U.S., Health Officials Say

Top U.S. health officials said Sunday that the newly discovered Omicron variant of the coronavirus is likely already in the U.S. even though it hasn't been detected yet and urged Americans to take precautions while scientists study its potential impact.

"If and when, and it's gonna be when, it comes here, hopefully we will be ready for it," said Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, in an interview on ABC on Sunday. He said that includes getting more people vaccinated and boosted and making sure people follow mask-wearing guidelines.

Japan to Bar Entry of Foreigners in Response to Omicron Variant

TOKYO-Japan will bar newly entering foreigners such as business travelers from entering the country starting Tuesday, in response to the Omicron coronavirus variant.

Japanese citizens and foreign residents of Japan who are returning from trips abroad will still be allowed to enter the country, the government said Monday.

Organized Retail Thefts Continue Over Thanksgiving Weekend

A string of organized retail thefts continued over Thanksgiving weekend, with a Best Buy in Minneapolis becoming the latest victim of a nationwide wave.

Over the past two weeks, stores have been targeted by groups of people who smash windows, take merchandise and often resell stolen goods online through fencing networks, according to officials.

Iran's Nuclear Advances Weigh on Renewed Talks

As negotiators gather in Vienna for talks aimed at reviving an international nuclear agreement with Iran, one big question looms: Has Tehran advanced its nuclear work so much in the past two years that the 2015 deal can no longer be rescued?

Restoring the pact, which placed limits on Iran's nuclear activities in exchange for relief from economic sanctions, is a top foreign-policy goal of the Biden administration. Iran's new president, however, has delayed restarting talks while pressing ahead with nuclear work.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

None scheduled

Economic Indicators (ET):

0830 3Q Balance of Payments

0830 Oct Industrial Prices, Raw Materials

Expected Major Events for Monday

00:01/UK: Oct Zoopla House Price Index

01:00/JPN: Oct Steel Imports & Exports Statistics

09:00/ITA: Oct PPI

09:00/GER: Nov Bavaria CPI

09:00/GER: Nov Hesse CPI

09:00/GER: Nov Baden-Wuerttemberg CPI

09:30/GER: Nov North Rhine Westphalia CPI

09:30/UK: Oct Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit

09:30/UK: Oct Monetary & Financial Statistics

09:30/UK: Oct Bank of England effective interest rates

10:00/GER: Nov Saxony CPI

13:00/GER: Nov Provisional CPI

13:30/CAN: 3Q Balance of Payments

13:30/CAN: Oct Industrial product & raw materials price indexes

15:00/US: Oct Pending Home Sales Index

15:30/US: Nov Texas Manufacturing Outlook Survey

23:30/JPN: Oct Labour Force Survey

23:50/JPN: Oct Preliminary Industrial Production

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Monday

Citius Pharmaceuticals Inc (CTXR) is expected to report $-0.03 for 4Q.

Electrovaya (EFL.T) is expected to report for 4Q.

Golub Capital BDC (GBDC) is expected to report $0.29 for 4Q.

Korn Ferry (KFY) is expected to report $1.36 for 2Q.

Malvern Bancorp Inc (MLVF) is expected to report $0.25 for 4Q.

Mullen Automotive Inc. (MULN) is expected to report for 3Q.

Oncotelic Therapeutics Inc (OTLC) is expected to report for 3Q.

Serinus Energy PLC (SEN-WA,SENX.LN) is expected to report for 3Q.

StoneX Group Inc (SNEX) is expected to report for 4Q.

Three Valley Copper Corp (TVC.V) is expected to report for 3Q.

United States Antimony (UAMY) is expected to report for 3Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

There are no actions to report since Friday.

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

November 29, 2021 05:53 ET (10:53 GMT)

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