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US futures climb as markets start 2022 in style, with Omicron fears fading and the recovery in focus

Stocks started 2022 in style.

Xinhua News Agency/Getty Images

  • US futures climbed on Tuesday after the S&P 500 rose to another record high the previous day.
  • European stocks also climbed, as traders returned to their desks with optimism about the year ahead.
  • Investors have been cheered by signs that the Omicron coronavirus variant is milder than previous iterations.

US futures rose on Tuesday after stocks rose to a record high on the first trading day of 2022, with fears about the Omicron coronavirus variant fading.

S&P 500 futures climbed 0.39% after the benchmark stock index rose 0.64% to a new high Monday. Dow Jones futures rose 0.38%, while Nasdaq 100 futures moved up 0.37%.

Investors have started the year in optimistic fashion, in part because studies have shown the Omicron coronavirus variant is milder than previous iterations of the disease.

Signs that the economic recovery in the US and the rest of the world is continuing despite strong inflation have also cheered stock markets.

“New Year optimism fed through to a jaunty January start for markets, as investors accentuated the positives,” said Richard Hunter, head of markets at trading platform Interactive Investor.

“Despite continually rising cases of Omicron, there is a growing belief that the variant is less deadly, if more transmissible, particularly when coming up against the wall of triple-jabbed individuals.”

Both Apple and Tesla were beneficiaries of the early-2022 optimism. Apple stock rose to briefly take the company’s market capitalization above $3 trillion, making it the first company to reach this milestone.

Tesla stock soared 13.5% after Elon Musk’s electric car company beat expectations about deliveries in the fourth quarter. Both Apple and Tesla were little changed in pre-market trading on Tuesday.

European stocks climbed in early trading Tuesday, with the continent-wide Stoxx 600 up 1.23%. London’s FTSE 100 was 1.31% higher, as traders returned from holiday.

In Asia overnight, China’s CSI 300 index slipped 0.46% while Tokyo’s Nikkei 225 closed 1.77% higher as trading began for the year.

Read more: Amateur traders, Reddit apes, and meme lords trounced Wall Street for 2 years. But in 2022… the big shots are going to strike back.

Oil prices edged higher after posting solid gains Monday, with upbeat economic predictions raising expectations for demand.

Brent crude, the global benchmark, rose 0.72% to $79.53 a barrel, while WTI crude rose 0.74% to $76.64 a barrel.

Investors will get a sense of the health of the US economy Tuesday, with the ISM manufacturing index and JOLTS job openings data both due to be released.

While analysts are largely optimistic about the outlook, many are warning that there are still a number of risks for the economy in the first quarter, with the US posting a record 1 million new coronavirus cases Monday.

“As the infected isolate, there will be fewer active workers in the economy, although inventories and changing working patterns will mitigate that,” said Paul Donovan, chief economist at UBS Global Wealth Management.

“Demand is likely to be hit. Quarantine limits consumers to online shopping, and in the absence of government help some incomes may suffer.”

US government bond yields, which move inversely to prices, rose sharply Monday as investors flocked towards stocks and bet on tighter monetary policy from the Federal Reserve in 2022.

The yield on the key 10-year US Treasury note rose slightly to 1.632% Tuesday, close to its highest level since November.

Elsewhere, bitcoin fell 1.31% to $46,611, according to data from the Bitstamp exchange.

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