Virus concerns to the fore

Concerns about the Omicron variant of COVID-19 weighed heavily on stocks on Friday and sent bond yields plummeting. On the foreign exchange markets, the euro managed to gain ground against the dollar, strengthening to around $1.13, and against sterling, rising to almost 85p, while the pound was little changed against the US currency at just over $1.33

The start of a new week has brought some relief though with European equities up around 1% at the off this morning, while bond yields are creeping higher again after a decline of 10-15bps in US, UK and German 10-year yields at the end of last week

Oil prices also tanked on Friday with the price of a barrel of Brent crude falling by around $10 to $72, though here too there has been a partial rebound with the latter now back up to around $76

ECB member Schnabel says the central bank expects “November will prove to be the peak” for Euro area inflation – data due tomorrow (Tuesday) are expected to show the annual rate at 4.4% this month (up from 4.1% in October) – adding that “we predict inflation will fall back below (the ECB’ s target of) 2%”

Other economic data scheduled for release this week include manufacturing and services PMIs on Wednesday and  Friday respectively, and the November employment report in the US and third-quarter Ireland GDP on Friday