Wall Street surges and oil prices recover

Oil prices have bounced from their lows, while US stocks have made early gains, but the overall atmosphere in markets remains nervous. 

• Wall Street bounces but European stocks still in the red
• High VIX reading points towards continued volatility
• Oil rebounds after OPEC+ sticks to expected output increase

Yet again the markets are being treated to a bounce in US indices, although this time around the gains are confined mostly to Wall Street, where the Dow has rallied some 500 points in early trading. Elsewhere the picture remains more disappointing, with continental European markets still firmly in the red. The FTSE 100 has rallied some 60 points off its low of the day however, as losses in some heavyweight names are trimmed. But what is clear is that the see-saw week is still with us; swings in risk appetite have been dramatic and rapid over the past few sessions, and with the Vix still at an elevated level, and rallying further today, it looks like the hard-fought battle between buyers and sellers still has a way to go. Broadly, the market is still worrying about the Omicrom variant and how it will affect Fed policy, and the interaction of these two issues has provided the fertile soil necessary for the recent selloff. 

There are pockets of strength however, and crude oil is one of them. Brent and WTI have both surged from the lows of the day. While OPEC+ decided to stick to its planned output increase, much of this has been factored in, and the lack of any additional increase has been enough to prompt a bounce for now. Whether, given the broader risk-off view, this has further to run remains to be seen, but oil bulls are certainly enjoying some much-needed respite for now.