TORONTO — North American stock markets partially recovered from Friday's steep plunge as crude oil prices rebounded on hopes that the latest COVID variant won't result in new lockdowns.
Markets suffered their worst day in more than a year to end last week with each losing at least two per cent on worries about the Omicron COVID-19 variant.
News over the weekend that the first cases seemed to induce only mild infection gave investors a sense of comfort and saw risk appetite revive itself somewhat, said Candice Bangsund, portfolio manager for Fiera Capital.
"It's still very preliminary and it's going to take a few weeks for scientists and for the population in general to see the severity and transmissibility of this strain," she said in an interview.
"Markets are likely to trade in a choppy and uneven manner in the coming weeks until there's more clarity around this new strain and its impacts on the economy."
Last week's selloff was short-lived but Monday's relief rally, while encouraging, was relatively muted because expectations for 2022 were optimistic for the global economy.
"So the hope is that this doesn't deal too much of a blow to those optimistic forecasts," Bangsund said.
The S&P/TSX composite index closed up 23.10 points to 21,149.00 after hitting an intraday low of 21,044.59 in morning trading.
In New York, the Dow Jones industrial average was up 236.60 points at 35,135.94. The S&P 500 index was up 60.65 points at 4,655.27, while the Nasdaq composite was up 291.17 points at 15,782.83.
Markets were somewhat buoyed by U.S. President Joe Biden's statement that economic lockdowns in response to this new variant were currently off the table.
“If people are vaccinated and wear their masks, there’s no need for lockdowns,” Biden said at a press conference Monday. Biden also said new travel restrictions shouldn't be required.
Bangsund said there's a general reluctance from governments to go back into full-blown lockdown mode in response to variants such as Omicron and Delta before it.
"They might dampen or delay that return to normalcy, (but) we don't expect that the impacts will be strong enough to derail the recovery altogether."
Materials was the best performer on the day, gaining 1.3 per cent as shares of Lithium Americas Corp. surged 15.6 per cent following an analyst upgrade.
The February gold contract was down US$2.90 at US$1,785.20 an ounce and the March copper contract was up five cents at US$4.34 a pound.
Energy was close behind as Vermilion Energy Inc. rose 10 per cent and Whitecap Resources Inc. was four per cent higher.
The sector benefited from an improvement in crude oil prices after losing 13.1 per cent on Friday.
The January crude contract was up US$1.80 at US$69.95 per barrel after reaching an intraday high of US$72.93. The January natural gas contract was down 62.3 cents at US$4.85 per mmBTU.
Oil prices rose on an improved risk appetite on hopes about the new variant and the possibility that this week's meeting of OPEC and its allies will affect its plans on lifting output in January.
"If anything, the latest pullback in prices and the added layer of uncertainty as to the outlook for global demand potentially could see OPEC maybe reduce or even delay that increase in production for January," said Bangsund.
"So that's what's driving oil prices today is the potential for OPEC maybe to take a sidelined approached as they assess the global outlook and the balance for crude markets."
The Canadian dollar traded for 78.34 cents US compared with 78.30 cents US on Friday.
This report by The Canadian Press was first published Nov. 29, 2021.
Companies in this story: (TSX:LAC, TSX:VET, TSX:WCP, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press