By Peter Nurse
Investing.com - European stock markets are expected to open marginally lower Wednesday, taking a breather after a sharp rally driven by hopes that the Omicron Covid-19 variant is a dud.
At 2 AM ET (0700 GMT), the DAX futures contract in Germany traded 0.1% lower, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. also fell 0.1%.
Global stock markets rallied strongly on Tuesday as investors shook off some anxiety about the latest coronavirus variant, buoyed by reports that the new variant may produce a milder reaction in patients and thus could be less disruptive to the world economy than previous strains.
A South African study suggested on Tuesday that booster doses produced by Pfizer (NYSE:PFE), and partner BioNTech (NASDAQ:BNTX), could help fend off infection from Omicron, although the study showed the new strain can partially evade protection from two doses.
An earlier study showed that GlaxoSmithKline's (LON:GSK) antibody-based therapy, made in conjunction with Vir Biotechnology (NASDAQ:VIR), was effective against it.
Still, whatever the news surrounding Omicron, the countries in Europe are still battling to stop a fourth wave of the pandemic, with Germany recording the highest number of deaths from Covid-19 since February on Wednesday.
Elsewhere, investors will also be looking to see if tensions between Russian President Vladimir Putin and his U.S. counterpart Joe Biden are reduced after Tuesday’s video call, with the threat of new sanctions against Moscow lingering as Russia gathers troops near the Ukraine border.
Wednesday also sees the end of an era in Germany as Olaf Scholz is sworn in as chancellor, replacing Angela Merkel.
In corporate news, Nestle (SIX:NESN) will be in the spotlight after the world’s largest food company said late Tuesday it would cut its stake in L’Oreal (PA:OREP), selling shares worth 8.9 billion euros ($10 billion) back to the French cosmetics company. This holding has been under scrutiny for years, and Nestle has cut the weight of its holding for the first time in seven years.
Crude prices edged lower Wednesday, consolidating after two days of strong gains, as investors reprice the threat posed to global oil demand by Omicron.
Oil prices rebounded earlier this week from a collapse last week on rising optimism that the new variant will not cause major economic damage.
U.S. crude oil supply data from the American Petroleum Institute showed a draw of just over 3 million barrels last week, and investors now await crude oil supply data from the U.S. Energy Information Administration later in the day for confirmation.
By 2 AM ET, U.S. crude futures traded 0.8% lower at $71.50 a barrel, while the Brent contract fell 0.6% to $74.97. Both benchmarks posted gains of just under 5% on Monday and over 3% on Tuesday.
Additionally, gold futures rose 0.2% to $1,788.80/oz, while EUR/USD traded 0.3% higher at 1.1294.