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U.S. Indices Surge and Oil Prices Rally as Omicron Threats Ease, Despite this, EU Considers Tougher Travel Measures

S&P 500 surges as Omicron threat eases

The S&P 500 rose for a second consecutive session on Tuesday, as investors looked to have moved past recent concerns surrounding the Omicron variant.

Tuesday’s surge came as data from GSK, found that its antibody treatment showed resistance against Omicron.

đź’ˇ How did the companies’ shares react?
Shares of Vir Biotechnology Inc., the drug’s co-developer, rose as much as 5.2% in New York. Glaxo rose 0.2% in London after a study showed that the U.K. drugmaker’s vaccine developed with Medicago Inc. showed efficacy against several variants of Covid.

In a statement regarding today’s findings, the company’s Chief Scientific Officer Hal Barron stated that, “These pre-clinical data demonstrate the potential for our monoclonal antibody to be effective against the latest variant, Omicron, plus all other variants of concern defined to date by the WHO”.

After the emergence of this latest mutation, markets panicked, with investors selling off positions, to protect themselves from potential downside risks.

This week however has started bullish, with all major U.S. indices climbing higher. As of writing, the S&P 500 was up 2.11%.

Oil prices climb to 1-week high

As indices climbed, so too did energy prices, with crude oil rallying to its highest level in the last week during Tuesday’s session.

WTI crude hit an intraday high of $73.33, which is the highest oil prices have traded since November 29th.

The rally in oil comes a few days after OPEC+ opted to maintain its output increase to 400,000 bpd next month, despite calls from the U.S. for the cartel to do more.

đź’ˇ Winners in times of crisis
Many are benefiting from the current energy crisis which is only expected to heighten during the winter months. Yet, there are companies out there benefiting from this crisis.

The owner of the Drax power station is expected to profit from Britain’s energy crisis until 2023 and will plough billions into doubling its production of wood pellets. The FTSE 250 energy company’s shares hit seven-year highs last Wednesday after it told investors it aimed to invest £3bn by 2030. 

Energy prices dropped by as much as $22 in November, falling to a low of $63 per barrel, after previously trading at $85.

Many believe with an influx of new supply, prices may consolidate between $72 – $80 for the remainder of the year.

DAX 30 up, despite EU considering tougher travel measures

Germany’s DAX 30 was higher during the session, as traders ignored reports suggesting that the EU could stiffen travel requirements heading into Christmas.

With the Omicron variant spreading faster than previous mutations, European leaders have considered reintroducing pre-departure testing, for travelers coming into the continent from non-EU countries.

Regarding the potential change, the EU’s Health Commissioner Stella Kyriakides stated that, “We must now focus on stronger testing and contact tracing measures for travellers coming from areas of high risk”.

German’s Health Minister, Jens Spahn added that, “Until we know more, we need to be careful and so travel restrictions are important to keep the entry in Europe and Germany as low as possible”.

The DAX 30 closed 2.82% higher on the news.

“Do not anticipate and move without market confirmation – being a little late in your trade is your insurance that you are right or wrong.”

– Jesse Livermore

Eliman Dambell

Senior Market Analyst

 

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