S&P 500 enjoying relief rally, back to 4630 area ahead of remarks from Biden on Omicron

US equity markets are enjoying a relief rally this Monday, with the S&P 500 index higher by around 0.9%. The index dropped 2.3% on Friday to close under 4600 amid fears that the newly discovered Omicron Covid-19 variant would trigger travel restrictions and global lockdowns, hurting the outlook for global growth. That was the first sub-4600 close so far in November. The index has since reclaimed the 4600 level and currently trades around 4630.

But analysts said the decline was exacerbated given thin liquidity conditions due to the Thanksgiving holidays in the US, and some said the move lower was overdone. Thus, some dip-buying appetite has returned to the market, with investors hoping to clinch a good Black Friday deal. Preliminary reports in South Africa from doctors treating Omicron infected patients indicate the variant might be milder than older variants, which could also be helping risk appetite. But the latest numbers from the Gauteng province in South Africa showed a sharp jump in the number of hospitalised patients.

Given that the new variant is touted as being significantly more transmissible than the delta variant, if it does start to look as though it causes a severe disease, then risk-off may return to markets. US President Joe Biden will deliver a speech on the Omicron variant at 1645GMT, the White House announced earlier in the session.

Despite a rise in US government bond yields, which were also paring back on last Friday’s losses, the duration-sensitive US tech sector led the recovery in US equity markets on Monday, with the Nasdaq 100 gaining 1.5%. A more than 10% surge in Twitter’s share price on the news that CEO Jack Dorsey is expected to step down helped the sector.