MARKET WRAPS

Watch For:

Flash Estimate euro area inflation; BOE's Mann speaks; updates from easyJet, SAS.

Opening Call:

European stocks to drop at open after Moderna CEO casts uncertainty on vaccine efficacy against new variant. U.S. futures fall. The dollar strengthens against the euro and the yen. Oil rose and gold inched higher.

Equities:

European stocks are set to open sharply lower as Moderna CEO said existing vaccines will 'struggle' against the Omicron coronavirus variant.

Early futures indicated a positive open and stocks in Asia were trading broadly higher, but fragile investor confidence was dented after the article appeared in the Financial Times early Tuesday. European and U.S. stock futures dropped after the comments.

"This cautious positivity soon gave way to pessimism in late Asia trading on comments from the Moderna CEO Stephane Bancel to the FT, who predicted existing vaccines would struggle with the Omicron variant and who warned it would take months for pharmaceutical companies to manufacture enough jabs at a sufficient scale to make a difference," said Michael Hewson at CMC Markets.

"His tone contrasts with the likes of Pfizer and BioNTech was suggested any new vaccine would be able to modified fairly quickly. His rather candid comments have also seen oil prices slide back sharply, as an increasingly jittery market react with concern to the prospects of further restrictions and lower demand," said Hewson.

President Biden said Monday that Omicron was "not a cause for panic." The administration is working with drug companies to develop contingency plans for vaccines or boosters in case they are needed to fight the new variant, he said. Some analysts expect the economic impact of Omicron to be limited as vaccine manufacturers update their shots to combat it.

"There's less likelihood we see sustained downside from something like a variant because our ability to adapt to it is higher than it was," said Hani Redha, a portfolio manager at PineBridge Investments. "The ability to tailor vaccines makes a huge difference."

Some analysts think a serious economic downturn, like what happened last year, will likely be averted because more people have been vaccinated. But they also think a return to pre-pandemic levels of economic activity has been dramatically delayed, especially in sectors such as tourism. Consumption may also be hurt.

Forex:

The dollar strengthened against the euro and against the yen. "Currency traders spent Black Friday trying to get out of the store" as news of the Omicron variant triggered a flight from risk, Cambridge Global Payments' Karl Schamotta said.

This echoed "a pattern seen when the pandemic hit last year, the dollar dropped precipitously as traders unwound bets on US rate hikes, while a wipeout in carry trades boosted the euro and yen."

But a dollar recovery could be in the offing, the chief market strategist said. "Whether overall risk appetite continues to improve or last week's flight to safety resumes, the greenback seems well-positioned for outperformance against the yen and the euro," with Friday's carry trade unwind appearing to have faded.

USD/JPY recovered modestly as the global market rout driven by concerns about the Omicron variant eases. Further gains by the pair may rest on strength of the U.S. economic recovery and crude oil movements.

The emerging Covid-19 variant has triggered travel restrictions in some parts of the world and has cast a cloud over the Fed's path to tightening. Fed Chairman Powell is scheduled to appear before the Senate Banking Committee later in the day. Powell said in prepared remarks that the Omicron variant risks intensifying supply-chain disruptions that have fueled a surge in inflation.

The Norwegian krone should appreciate moderately versus the euro in 2022 as the Norges Bank raises interest rates further and the European Central Bank maintains its loose policies, Commerzbank said.

"This is unlikely to change until 2023, when the market will gradually price in that the ECB will also start to slowly raise its key rate in the second half of 2023," Commerzbank currency analyst Antje Praefcke said.

The Norges Bank has signalled it will take its policy rate to 1.0% by the end of 2022 and to 1.7% by the end of 2024, versus 0.25% at present, she said. Commerzbank expects EUR/NOK to fall to 9.65 by December 2022, from 10.1862 currently, before rising to 9.80 by December 2023.

Bonds:

Treasurys sold off and yields bounced back from the Omicron turmoil, with the 10-year rising to 1.542% from 1.484% Friday. Investors digested news about the new variant and came back a little calmer after the weekend.

"Omicron is unlikely to change the Fed's pathway," AmeriVet's Gregory Faranello said. "Potentially new vaccines if needed: this country has vaccine fatigue already. Won't make a difference."

Energy:

Oil rose in early Asia trade as jitters caused by the Omicron variant of Covid-19 have started to ease. However, as uncertainty remains about the level of danger, OPEC has delayed its technical meeting to give it more time to assess the situation.

Aside from updates on the Omicron variant, ANZ expects traders to also focus on talks to potentially revive the U.S.-Iran nuclear deal.

Metals:

Gold inched higher in early Asian trade. Traders are likely watching for the timing of an expected rate increase by the Fed, and signs that it will start to taper off asset purchases more quickly than expected, Oanda said.

Aluminum led gains in base metals in Asian trade after a recent selloff, as investors' fears over the likely impact of the Omicron Covid-19 variant on demand eased, said ANZ Research.

However, the rebound in base metals is being stymied by the current economic backdrop, the research firm said. Demand from China, which maintains Covid-zero containment measures, remains a concern due to potential shutdowns and restrictions, ANZ said.

TODAY'S TOP HEADLINES

New Omicron Variant Exacerbates Inflation Uncertainty, Powell Says

The new Omicron coronavirus variant risks intensifying supply-chain disruptions that have fueled a surge in inflation this year, Federal Reserve Chairman Jerome Powell said in testimony released Monday afternoon.

Mr. Powell is set to appear before the Senate Banking Committee alongside Treasury Secretary Janet Yellen on Tuesday morning.

China Manufacturing Gauge Shows Rebound in November

BEIJING-An official gauge of China's manufacturing unexpectedly rebounded to expansion in November, ending a two-month contraction resulting from a power crunch.

The official manufacturing purchasing managers index rose to 50.1 in November from October's 49.2, the National Bureau of Statistics said Tuesday.

Oil Prices Stabilize After Omicron-Driven Friday Selloff

Oil prices stabilized on Monday, clawing back some of their losses after a new variant of the coronavirus fueled crude's worst trading session since April 2020.

U.S. crude ended the day up 2.6% at $69.95 a barrel after previously rising as much as 6.9%, rebounding alongside stocks and other commodities following a Friday selloff driven by the new Omicron variant of the coronavirus. Oil fell 13% on Friday but is still up about 45% for the year.

Cyber Monday Sales Flat as Smaller Savings Curb Incentive to Spend

U.S. online sales were flat throughout Cyber Monday, as smaller discounts gave shoppers less incentive to spend, but analysts say sales could finish slightly higher than last year by the time West Coast shoppers finish for the night.

Shoppers spent $7.1 billion online as of 9 p.m. eastern time in the U.S., according to transaction data compiled by the Adobe Digital Economy Index. Shoppers are expected to spend between $10.4 billion and $11.1 billion on Cyber Monday, Adobe said. American consumers spent $10.8 billion online last year.

FTC Asks Amazon, Walmart for Information About Supply-Chain Issues

The Federal Trade Commission is seeking information from Amazon.com Inc., Procter & Gamble Co., Walmart Inc. and others about how they are handling supply-chain snarls, part of a study into whether the problems have led to anticompetitive behavior and higher prices.

The document request isn't part of any law-enforcement action, the FTC said in a press release. Instead, the agency said it is looking to understand the reasons behind the widespread supply-chain problems that have crimped economic growth.

CDC Says Everyone 18 and Older Should Get Covid-19 Booster Due to Omicron Variant

The Centers for Disease Control and Prevention strengthened its Covid-19 booster-shot recommendations, reflecting the potential threat the new Omicron variant poses to the pandemic response in the U.S. and world-wide.

The CDC on Monday recommended that everyone 18 and older get an additional shot after completing a first course of Covid-19 vaccination. The agency earlier this month encouraged boosters only for those 50 and above, adding that people ages 18 and above could get an additional dose.

Turkey's Lira Crisis Exposes Reliance on Imported Energy

Turkey's currency crisis has exposed a key weakness in its economy: a near total dependence on imported energy to keep households warm and factories humming.

Turkey is surrounded by some of the world's richest reserves of fossil fuels, in the Middle East and Central Asia, but produces little oil, gas or coal of its own. The country imports 93% of the oil and 99% of the gas it consumes, a vulnerability when energy prices in dollars climb and the lira slides.

FDA Moving to Authorize Pfizer-BioNTech Booster for 16-, 17-Year-Olds

The Food and Drug Administration could authorize Covid-19 boosters from Pfizer Inc. and BioNTech SE for use in 16- and 17-year olds as soon as next week as concerns rise over a new, possibly more transmissible variant, according to a person familiar with the planning.

The agency is planning to move rapidly to take action on a request by the companies to authorize boosters for 16- and-17 year olds, according to a person familiar with the matter. So far, only people 18 years and older are eligible for boosters.

Iran Doubles Down on Demands as Nuclear Talks Resume

VIENNA-Iran made many demands as it resumed talks Monday with the U.S. and other world powers aimed at salvaging the 2015 nuclear deal, doubling down on its position before negotiations first started in the spring and raising doubts over an early breakthrough.

The talks, taking place in the Austrian capital amid a strict coronavirus lockdown, are intended to agree on the steps Iran and the U.S. will take to return into compliance with the 2015 deal, which lifted most international sanctions on Tehran in exchange for strict but temporary restrictions on Iran's nuclear work.

Omicron Variant Drives Rise in Covid-19 Hospitalizations in South Africa Hot Spot

JOHANNESBURG-The emergence of the Omicron variant of the coronavirus in South Africa has driven a sharp increase in Covid-19 hospitalizations in the country's hot-spot province over the past two weeks, although fewer patients are being treated for severe disease than in previous surges, the country's National Institute for Communicable Diseases said.

There has also been an unusually high number of hospitalizations of children under 2 years old around the capital, Pretoria, where cases started rising first, although some of these may be precautionary, the institute said.

Turkey's Lira Crisis Exposes Reliance on Imported Energy

Turkey's currency crisis has exposed a key weakness in its economy: a near total dependence on imported energy to keep households warm and factories humming.

Turkey is surrounded by some of the world's richest reserves of fossil fuels, in the Middle East and Central Asia, but produces little oil, gas or coal of its own. The country imports 93% of the oil and 99% of the gas it consumes, a vulnerability when energy prices in dollars climb and the lira slides.

FDA Moving to Authorize Pfizer-BioNTech Booster for 16-, 17-Year-Olds

The Food and Drug Administration could authorize Covid-19 boosters from Pfizer Inc. and BioNTech SE for use in 16- and 17-year olds as soon as next week as concerns rise over a new, possibly more transmissible variant, according to a person familiar with the planning.

The agency is planning to move rapidly to take action on a request by the companies to authorize boosters for 16- and-17 year olds, according to a person familiar with the matter. So far, only people 18 years and older are eligible for boosters.

Manulife Banks Nearly $4.7 Billion for Second Infrastructure Investment Fund

Manulife Investment Management has raised $4.65 billion to invest in infrastructure, a sector where investors' hopes have been sparked by the transition to renewable energy and the possibility of increased U.S. government spending.

Lululemon Hits Back at Peloton, Sues Over Allegedly Copied Designs

Lululemon and Peloton used to make workout clothes together. Now, they're locked in a legal battle.

The first lawsuit came last week, when Peloton Interactive Inc. pre-emptively sued Lululemon Athletica Inc. in the Southern District of New York, asking a federal court to declare that it didn't infringe on Lululemon's designs.

FTC Asks Amazon, Walmart for Information About Supply-Chain Issues

The Federal Trade Commission is seeking information from Amazon.com Inc., Procter & Gamble Co., Walmart Inc. and others about how they are handling supply-chain snarls, part of a study into whether the problems have led to anticompetitive behavior and higher prices.

The document request isn't part of any law-enforcement action, the FTC said in a press release. Instead, the agency said it is looking to understand the reasons behind the widespread supply-chain problems that have crimped economic growth.

Microsoft's Satya Nadella Sells Half of His Shares in the Company

Microsoft Corp. Chief Executive Satya Nadella sold about half of his shares in the company last week, according to a federal securities filing.

In the filing last week with the U.S. Securities and Exchange Commission, the Redmond, Wash.-based software company reported Mr. Nadella sold 838,584 shares over two days, down from close to 1.7 million shares.

Write to sarka.halas@wsj.com

Expected Major Events for Tuesday

00:01/UK: CBI Service Sector Survey

05:30/NED: Oct PPI

05:30/NED: Oct Retail turnover

06:00/FIN: 3Q GDP

07:00/NOR: 3Q Credit Indicator C3

07:00/NOR: Oct Credit Indicator C2

07:00/DEN: Oct Unemployment

07:00/DEN: 3Q Preliminary GDP

07:00/TUR: 3Q GDP

07:45/FRA: Oct Housing starts

07:45/FRA: Oct Household consumption expenditure in manufactured goods

07:45/FRA: Oct PPI

07:45/FRA: Nov Provisional CPI

07:45/FRA: 3Q GDP - detailed figures

08:00/SPN: Oct Retail Sales

08:00/SWI: Nov KOF economic barometer

08:00/CZE: 3Q GDP

08:55/GER: Nov Labour market statistics (incl unemployment)

09:00/GER: Nov Brandenburg CPI

09:00/BUL: Oct PPI

09:00/POL: 3Q GDP

09:00/ICE: 3Q GDP

09:00/ITA: 3Q GDP

10:00/MLT: Oct PPI

10:00/CRO: Oct Industrial Production Volume Index

10:00/CYP: Oct PPI

10:00/GRE: Oct PPI

10:00/GRE: Sep Turnover Index in Retail Trade

10:00/ITA: Nov Provisional CPI

10:00/ITA: Nov Cities CPI

10:00/LUX: Oct PPI

10:00/CRO: Oct Retail trade

10:00/EU: Nov Flash Estimate euro area inflation

11:00/POR: Oct Retail trade

11:00/POR: 3Q GDP

11:00/POR: Oct Industrial production index

14:00/BEL: 3Q Final GDP

16:59/SPN: Sep Monthly Balance of Payments

16:59/BEL: Oct PPI

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(END) Dow Jones Newswires

November 30, 2021 02:01 ET (07:01 GMT)

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