Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

MARKETS have kicked off the week in resilient mood on hopes that the worst case scenarios from the Omicron variant of Covid-19 can be avoided.

Like the rest of us, investors have been watching for any news on both Omicron’s rate of transmission and its resilience to existing vaccines. While new cases of the variant are being found all the time, a consensus is building that double and booster-vaccinated people should enjoy a significant degree of protection against serious illness. That lowers the risk that new lockdowns will have to be imposed.

This has helped a bounce-back in those stocks most at risk from restrictions, and which had been punished most severely in the sell-off that began at the end of November.

British Airways owner International Consolidated Airlines and Melrose Industries, which supplies airlines, were both among the early gainers in London on Monday.

The gains this morning add to the sense that, while sentiment remains uneasy, investors are willing to buy the dips when they come. The trend is fleshed out in analysis by VandaTrack, which measures retail investor flows. It showed that $10bn was invested by retail investors in the week to December 4 despite the worrying news about Omicron.

That’s perhaps tied up with expectations around monetary policy, with investors seeing any blow to economic growth as a potential reason for policymakers at the Fed, the Bank of England and elsewhere to hold off on their efforts to tighten monetary policy. That’s a positive for shares.

The reason for tightening, of course, is inflation which reached 6.2% in the US in October. A new reading for November is due on Friday and will give the market more to mull over. It’s unlikely that anything will blow the Fed off its current tightening path, however, following comments by Fed Chairman Jay Powell last week. Powell explained to US lawmakers that he no longer saw high inflation as transitory - suggesting the Fed sees the need to withdraw stimulus.

Other economic news this week will include inflation numbers from China, as well as GDP readings for the eurozone and Japan.

The final point of focus for investors this week is oil. Prices for the commodity fell after news of Omicron emerged, and were depressed further by news last week that OPEC nations plus Russia would stick to plans to increase supply. The easing of Omicron fears has helped the black stuff recover some of that ground and Brent Crude rose 2.5% in early trading on Monday to sit at around $71 a barrel. That’s down from $86 in October, but still represents a 30% rise in prices this year.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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